Question;Instruction;Please you;need to follow an appropriate format explained below..;All;written answers must be clearly typedAll assignment;questions and sub-questions should be typed in order at the heading.Separate each main question by different;page. For example, if Question 1 (a) (b) (c) and (d) are answered on pages 1-2;then start Question 2 on page 3, etc.;The answers should be written clearly and;concisely with the main points only, and avoid irrelevant points. In your answers;You;should analyse, explain and show how and why you draw your answers. Providing;just answers without explanation will not receive full marks.;You should also include appropriate and;relevant diagrams, charts and tables together in your explanation. Draw them;using Microsoft Word/Excel/Power Point toolsImportant note writing is to correctly;reference the sources of information that you have used.Assignment;QuestionsQuestion;1;Part A;Ethanol;(barrels per day);Food crops;(tonnes per day);70;0;64;1;54;2;40;3;22;4;0;5;Australia;produces ethanol from sugar cane, and the land used to grow sugar cane is used;to grow food crops. Suppose that Australia?s production possibilities for;ethanol and food crops are as in the table.;If Australia;increases its production of ethanol from 40 barrels per day to 54 barrels per;day, what is the opportunity cost of an additional barrel of ethanol? Does;Australia face an increasing opportunity cost of ethanol? What feature of Australia?s;PPF illustrates increasing opportunity cost?;Part B;The table sets out the demand and;supply schedules for banana.;Price;(dollars per box);Quantity;demanded;Quantity;supplied;(boxes a week);6;500;4000;5;1000;3500;4;1500;3000;3;2000;2500;2;2500;2000;1;3000;800;Draw a graph of the market forbanana. What are the equilibrium price and quantity? Explain;why. If;the price of banana was $1.50 a box. What would be the situation in the banana;market (shortage or surplus)? Explain why and how the price and quantity would adjust.;Suppose;a cyclone destroyed some banana farms in QLD and the quantity of banana;supplied decreased by 500 boxes a week at each price. Explain what would happen;to the market supply and demand and how would the equilibrium price and;quantity adjust? Illustrate the changes on your graph. Suppose;a cyclone decreased banana supply by 500 boxes a week at each price. But at the;same time the demand for banana increased by 500 boxes a week at each price. Explain;what would happen to the market equilibrium price and quantity? Illustrate the;changes on your graph.;Question;2;?;Part A;Price;(dollars;per night per room);Quantity demanded;(no. of rooms;per night);200;10;250;9;300;8;350;400;6;4;A tour agency?s demand;schedule for hotel rooms is given in the table.;What happens to total expenditure of the;tour agency if the price falls from $400 to $350 per night per room? Is the;demand for hotel room elastic, inelastic, or;unit elastic?What happens to total expenditure of the;tour agency if the price falls from $300 to $250 per night? Is the demand for hotel room elastic, inelastic, or unit elastic?Calculate the demand;elasticity of the hotel room, whenthe price falls from $400 to $350 per;night per room and when the price falls from;$300 to $250, respectively. Part BWhen Hana?s income was $3,300, she bought 5kgs of rice and;2kgs of beef a month. Now her income is $4,400 and she buys 4.5kgs of rice and 2.75kgs;of beef a month. Calculate Hana?s income;elasticity of demand for beef. Show your calculation.Calculate Hana?s income;elasticity of demand for rice. Is rice normal good or inferior;good? Show your calculation. Suppose a flood cuts the;quantity of sugar cane grown by 4 per cent.;If the price elasticity of demand for sugar cane is 0.5, by how much;will the price of sugar cane rise? Show your calculation.If sugar makers estimate that this change in the price of sugar cane;will increase the price of sugar by 15 per cent and decrease the quantity;demanded for sugar by 3 per cent, what is the price elasticity of demand for sugar?;Show your calculation.If coffee makers estimate that, with the change in the price of sugar;the quantity of coffee demanded will decrease by 6 per cent, what is the cross;elasticity of demand for coffee with respect to the price of sugar?Question;3;? Part A;Rent;(dollar per;room);Quantity;demanded;(rooms);Quantity;supplied;(rooms);500;2,500;1,500;550;2,250;1,750;600;2,000;2,000;650;1,750;2,250;700;1,500;2,500;The table shows the demand;and supply schedules for low-cost housing.;If;the government puts a rent ceiling of $650 a month, what is the rent paid and;how many rooms are rented? Explain why?Now the government strictly enforces a rent ceiling;of $550 a month. How many rooms are rented? Is the low-cost housing market;efficient? Explain why.If the government strictly;enforces a rent ceiling of $550 a month, what happens to consumer surplus and;producer surplus? Using the table information, draw a diagram to explain. Also;calculate total housing search costs and deadweight loss. Show your calculation.;Part B;The US Farm Bill 2012 indicates that;the domestic price of wheat will be maintained at $350 per tonne, which is;above the market equilibrium level of $300 per tonne, in order to support for;domestic wheat growers. At the market;equilibrium, 100 tonnes are supplied.;Is the wheat price control in the US a price;floor or a price ceiling?On a graph, show and explain if the price;control in the US creates a shortage or a surplus in the market for wheat.;Assume that the US does not trade wheat internationally.Show on a graph and explain how the;price control in the US changes consumer surplus, producer surplus, and deadweight;loss in the domestic wheat market.Question;4;Part A;South;Korea is one of the major beef importing countries. With no international;trade, Korea?s equilibrium price for beef was $10 million per kilo tonne and;equilibrium quantity was 30 kilo tonne. If Korea opens its market to;international trade with no tariff, domestic supply would be 10 kilo tonne and;domestic demand would be 50 kilo tonne at the world price of $5 million per;kilo tonne. However, Korea currently imposes 40 per cent tariff rate on all;imported beef. With 40 per cent tariff, Korea?s domestic supply and domestic;demand are 20 kilo tonne and 40 kilo tonne respectively. Assume that intercept;of supply curve is $3 million and demand curve is $15 million per kilo tonne.;Analyse the;effects of 40 per cent tariff rate in Korea on the price, domestic supply and;demand, and beef imports in comparison with no tariff case.Draw a graph to identify;the areas of gains and losses from the trade with 40 per cent tariff rate with;brief explanation. Then, calculate the actual values of change in consumer surplus;producer surplus, tariff revenue and the amount of deadweight loss. Show your;calculation. Suppose that Korea does not impose tariff;any more but instead imposes an import quota of 20 kilo tonne. Draw a graph to identify;the areas of gains and losses from the import quota, importers? profit, and the;deadweight loss. Provide your explanation. Part B;The figure illustrates the;market for tomatoes. A small town is surrounded by a large tomato farm. The;tomato grower sprays the plants with chemicals to control disease and the;chemical waste flows into the river passing through the town. The marginal external cost of the chemical;waste is equal to the marginal private;cost of producing tomatoes.Draw a graph that shows marginal social;cost (MSC) curve together with the marginal private cost (= S) and marginal;social benefit (= D) curve. If no one owns the river and the town takes;no action to control the waste, what is the quantity of tomatoes, and the;deadweight loss created? If the town owns the river and makes the;tomato grower pay the cost of pollution, how many tomatoes are produced? What;does the grower pay the town per tonne of tomatoes produced?
Paper#56933 | Written in 18-Jul-2015Price : $42