henryclay010

1
Market for Apartments in Shanghai - Market for
Foreign Clothing in Australia - Economics
Assessment Answer
Economics Assessment
2
Description

• Economics - Market for Apartments in Shanghai -
  Market for Foreign Clothing in Australia -
  Assessment Answer, Download the solution from our
  Economics assessment expert.

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Question 1

• Recently the local government in Shanghai has
  introduced a price ceiling for the sale of
  apartments to deal with the huge increase in
  prices over the last few years.  Apartments that
  could sell in the market for 130,000 yuan
  (US19,400) per square metre, now have to be sold
  at a price about 30 per cent lower, that is, at a
  price of 100,000 yuan per square metre to meet
  the government requirement.
• What effect is this likely to have on the market
  for apartments in Shanghai?  What will happen to
  the quantity of apartments demanded? What will
  happen to the quantity supplied?  Who gains? Who
  loses? Draw a diagram to support your answer.

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Question 2

• In the 1980s Australia restricted the amount of
  clothing products that could be imported into
  Australia. Source Emmery, Michael (1999).
• Using supply and demand analysis graph and
  explain what the effect of these restrictions
  would have been on the market for foreign
  clothing in Australia and on the market for
  locally made clothing in Australia.

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Question 3

• In 2018 steel workers in America received the
  biggest wage increase in six years after long
  negotiations with the steel companies. Source
  Singh, Rajesh Kumar (2018).
• At the same time the price of aluminium, which is
  a substitute for steel, has seen a price drop in
  2018 selling at below US2000 a tonne. This is
  mainly due to increased supply of aluminium from
  China. Source Djukanovic, Goran (2018).
• What are the effects on the equilibrium price and
  quantity of steel if the wages of steelworkers
  rise and, simultaneously, the price of aluminium
  falls? Draw a diagram to support your answer.

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Question 4

• In 2019 drought has reduced the amount of
  production of farm products in Australia by many
  billions of dollars. Source Sullivan, Kath
  (2019).
• At the same time the demand for farm products is
  generally considered to be price inelastic.
• If the demand for farm products is
  price-inelastic, a reduction in farm production
  will increase farm incomes. Explain why this is
  so. Use a diagram to support your answer.

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Question 5

• In 2019 the UK government increased the tax paid
  on flights out of the UK (specifically Heathrow
  airport) to approximately 300 per ticket. This
  tax is collected from airline companies who use
  Heathrow Airport for their operations. Source
  Graham, Matt (2018).
• onsider the market for airline travel. The
  initial market equilibrium is at 10 million
  tickets sold per year at an average price of 500
  each. Then, the UK government imposes a tax on
  the market, collected from sellers (the airline
  companies). The tax is 300 per ticket. 

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• Show the effect of this on the market for airline
  travel. Show the effect on consumers of airline
  travel, on the airlines and on the government.
  Does the UK economy gain or lose as a result of
  the tax? Explain why. Use a diagram to support
  your answer.
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