Using supply and demand graphs, illustrate and explain the following scenarios:

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Using supply and demand graphs, illustrate and explain the following scenarios:			a) An increase in	the amount of		employees retiring.		b) The prices of materials used in car manufacturing	deceases.		c) The government introduces a tax on mixed alcohol drinks.		d) The effect of a decrease in income on the consumption of designer clothes		e) The effect of an increase in income on the occurrence of holidays.		f)  Genetic engineering has produced a coffee bean resistant to disease	Over recent months the Australian government has issued strong travel warnings advising Australian citizens not to travel to any country registered on the smart	traveller		list. Given that information what do you think is likely to happen in the:	1. Australian international air travel market?		2. Australian domestic holiday market?					Required:			Explain how this information will affect demand and/or supply in each of these markets.Length: 1600 words Submission method options Alternative submission method Task Answer four (4) questions. Maximum of 400 words for each question. These are questions which require short answers to a series of issues relating to economic principles and concepts.   Question 1             [2.5 mark for each sub section; Total 15 marks]    Using supply and demand graphs, illustrate and explain the following scenarios:   a) An increase in the amount of employees retiring. b) The prices of materials used in car manufacturing deceases. c) The government introduces a tax on mixed alcohol drinks. d) The effect of a decrease in income on the consumption of designer clothes e) The effect of an increase in income on the occurrence of holidays. f)  Genetic engineering has produced a coffee bean resistant to disease     Question 2:               [2.5 marks for each sub section; Total 5 marks]   Over recent months the Australian government has issued strong travel warnings advising Australian citizens not to travel to any country registered on the smart traveller list. Given that information what do you think is likely to happen in the: 1. Australian international air travel market? 2. Australian domestic holiday market?   Required: Explain how this information will affect demand and/or supply in each of these markets. Note: you must use diagrams to support your answer.     Question 3                  [2.5 marks for each assumption; Total 5 marks] The following diagram depicts the Production Possibility Frontier for a hypothetical economy. Production possibilities frontier In this economy is it correct to assume that: a. Point C is preferable to Point D; and b. Point H would be preferable to point C. Required: Explain your response to the above assumptions.     Question 4:                 [3 marks for each sub sections; Total 12 marks] Below is the demand and supply schedule for bread in East Yeastville.   	Price ($) 	Quantity Demanded 	Quantity Supplied 	5.00 	1,000 	6,000 	4.50 	1,300 	4,500 	4.00 	1,600 	4,000 	3.50 	2,000 	3,500 	3.00 	3,000 	3,000 	2.50 	3,200 	2,700 	2.00 	4,000 	2,200 	1.50 	4,500 	1,800 	1.00 	5,400 	1,400 	0.50 	7,000 	1,200 a) Graph the demand and supply schedule. What is the equilibrium price and quantity? b) At the price of $1, is there an excess of demand or supply? Explain your answer c) Suppose supply increases by 1,800 units at each price level, draw the new supply curve on the graph d) What will now happen to price, quantity demanded and quantity supplied? Explain your answer   Rationale The purpose of this assessment is to ensure that you have mastered the micro economic concepts and tools covered in topics 1 to 5 relating to what is economics, demand and supply, elasticity and market structures. This assessment task evaluates your progress towards achieving Learning Outcomes 1, 2 and 4: be able to apply economic concepts and principles to daily life; be able to explain the economic decision making of producers and consumers and their interaction in the market place; be able to construct graphs and diagrams to demonstrate how economic concepts and principles work in practice. Marking criteria   	Learning outcome assessed 	Criteria 	HD 85%-100% 	DI 75%-84% 	CR 65%-74% 	PS 50%-64% 	FL

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 Question 1             [2.5 mark for each sub section; Total 15 marks]
  
Using supply and demand graphs, illustrate and explain the following scenarios:
 
a) An increase in the amount of employees retiring.
Answer – There will be shortage of workers in the labor market as supply of the total employees will fall down. At given wage rate, fewer workers will be available for work because majority of the labor force will start retiring. As a result, there will be rise market wage rate and fall in the employment of workers. Current workers would demand higher wage rate and also the employment level will get reduced.
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D1
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SS
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PRICE
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P2
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SS
1
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P1
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QUANTITY
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Q1
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Q2
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b) The prices of materials used in car manufacturing deceases.
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SS1
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PRICE
)Answer – Fall in the input prices of the good will result into rise in supply of car in the market because of which the supply curve will shift rightwards leading to rise in equilibrium quantity of car and fall in prices of car in the market. Input prices play a crucial role in determining the output prices in the market because costs of inputs is the prime factor which makes up the final price of the good in the market.
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SS2
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P1
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P2
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Q2
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Q1
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QUANTITY
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c) The government introduces a tax on mixed alcohol drinks.
Answer – Introducing tax on mixed alcohol drinks will reduce the demand of mixed alcohol drinks in the market leading to downward shift of the demand curve from D1 to D2. As a result, the equilibrium quantity will fall from E1 to E2 and equilibrium price will fall from P1 to P2.
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PRICE
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SS1
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DD2
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P1
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P2
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DD1
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QUANTITY
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d) The effect of a decrease in income on the consumption of designer clothes
Answer – There is positive correlation between income level and consumption level. As income falls, the demand of designer clothes also falls down from D1 to D2 leading to reduction in price of designer clothes and equilibrium quantity consumed of such designer clothes. 
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PRICE
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SS1
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DD2
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P1
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P2
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e) The effect of an increase in income on the occurrence of holidays.
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SS1
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DD2
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PRICE
)Answer – An increase in income will increase the expenditure of people over holidays as people would like to have more of leisure activities at higher income level. As a result, the demand curve for occurrence of holidays will shift rightwards from D1 to D2 leading to rise in prices of holiday packages and equilibrium quantity.
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P2
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Q2
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Q1
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P1
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QUANTITY
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f)  Genetic engineering has produced a coffee bean resistant to disease
Answer – Production of coffee bean which are resistant to disease will increase the demand of such beans in the market leading to rightward shift of the demand curve from D1 to D2. As a result, there will be rise in equilibrium market price and quantity (Allan, 2015).
Question 2:               [2.5 marks for each sub section; Total 5 marks]
Over recent months the Australian government has issued strong travel warnings advising Australian citizens not to travel to any country registered on the smart traveller list. Given that information what do you think is likely to happen in the:
1.

Using supply and demand graphs, illustrate and explain the following scenarios: a) An increase in the amount of employees retiring. b) The prices of materials used in car manufacturing deceases . c)...

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