Problem
It's the year 2030, and scientists have found a way to mine gold deposits situated deep inside the Earth, that has been inaccessible with today's technology.
Answer the following questions:
i. What effect will this development of mining technology have on the supply of gold? . Type U for unknown, L for shift left, R for shift right, N for no effect.
ii. Consider the Australian Government implements a tax on gold. If this brings about a shift for gold that is equal in magnitude to the shift from the increased gold production from mining (ceteris paribus), how would the equilibrium price of gold compare to before introducing both the tax and mining technology? . Type L for lower, H for higher, N for no change, U for unknown and need more information.
iii. Due to the increased demand for gold mining equipment, the suppliers of gold mining equipment have been able to sell this equipment at higher prices. How would this affect the supply of gold? Ans = Type N for no effect at all, M for increase supply, D for decrease supply, U for unknown and need more information.