Subject Code : BUECO5903
Assignment Task :

Question 1 

Using a production possibilities frontier (PPF) diagram, determine how does the PPF change in response to the following events: 

a) A relaxation of policies allowing more foreign direct investment into the country

b) Increasing the minimum wage level

c) A decrease in expenditure on research and development

d) An increase in the retirement age

e) Government policies supporting the provision of services, without affecting manufacturing. 

 

Question 2 

Identify what sort of effect the following events have: 

a) A concerted reduction in the total production level in oil markets

b) Government policies supporting agricultural production

c) The implementation of subsidies to manufacturing of cars in Australia

d) The implementation of a Carbon tax in the resources exploitation sector. A Carbon tax is charged according to the level of emissions of greenhouse gases in an economy.

e) The implementation of a new loan program to university students in the education sector 

You are required to explain whether the event acts on the demand or supply side, and whether the event leads to a quantity or price change, or leads to a shift in demand and/or supply. Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply. 

 

Question 3 

Compare the impact of a recession that reduces consumer income by 5 percent on the consumption of durable goods and house rentals. Suppose that the income elasticity of demand for durable goods is 1.5 and the income elasticity of demand for house rentals is 0.3. Based on your response, make a policy argument to support through government funding either businesses or house rentals. 

 

Question 4 

Using a supply and demand analysis show first the labour market in equilibrium, and then show a) the effect of a reduction in the demand for labour as a consequence of a pandemic. 

b) The effect of a government subsidy to producers to restore the employment of labour. Provide a diagram with clear axis details. Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply. 

 

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  • Uploaded By : Grace
  • Posted on : September 09th, 2018

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