Microeconomics Questions:
Problem 1:
Consider the market for wholesale market for milk in Tasmania in 2019 with a perfect elastic supply curve and downward sloping demand curve. The current equilibrium price of milk is $0.55 is per litre and 950 million litres of milk is bought and sold.
a. Draw a diagram showing the wholesale market for milk in Tasmania. Include a title and label the demand curve, supply curve, equilibrium price and quantity.
b. Suppose that in 2020 due to lower feed costs for dairy cows, the price drops to $0.45 per litre. Illustrate the change in equilibrium price and quantity and any changes in the demand or supply of wholesale milk in Tasmania.
c. Calculate the change in the price using the cross/mid -point formula. Use the demand elasticity for wholesale milk of ε = - 0.5 to estimate the % change in quantity demanded for wholesale milk in 2020.
d. Use the following formula: Q1 = ((200%+%ΔQ)/(200%-%ΔQ))Q0 to show that the quantity of wholesale milk bought and sold in 2020 is 1050 litres.
e. Illustrate in your diagram and calculate the change in the consumer surplus as result of the lower feed costs for dairy cows.
f. Explain why the consumer surplus for consumers of Tasmanian milk has changed?
Problem 2:
Consider the market for single bedroom rental apartments in Hobart in 2019 with an upward sloping supply curve and downward sloping demand curve. The current equilibrium price of single bedroom rental apartments is $350 per week with 15,000.
a. Draw a diagram showing the market for single bedroom rental apartments in Inner Hobart. Include an appropriate title and label the demand curve, supply curve, equilibrium price and quantity.
b. Consider if the government introduces a legally enforced price ceiling of $200/week that the price (rent) of single bedroom rental apartments in Inner Hobart cannot be above.
i. On your diagram label the number of for single bedroom rental apartments supplied and demanded and the price with the price ceiling. Label the consumer and producer surplus and dead-weight loss with the price ceiling.
ii. Explain who is better and worse off a result of the price ceiling and why.
Problem 3:
a. You are required to provide the values of the Australian key economic indicators listed in the table attached for the period February 2019 to March 2020 (13 periods).
b. How did the Australian economy far e in the last 12 months in terms of output growth, inflation and unemployment? Describe in detail the movement s /trend s observed for these variables.
c. On 18 March, 2020, the Reserve Bank of Australia (RBA)'s board called for a special meeting and the minutes of the meeting. According to the minutes, how is the novel coronavirus (COVID -19) pandemic expected to
i. Affect the global economic outlook? Explain your answer.
ii. Affect Australia's consumer spending and investment spending? Explain your answer.
iii. What monetary policy decision did the board make? Explain the reason for that decision.
Problem 4:
a. Refer to the diagrams below to describe the Tasmania's employment outlook compared to the national employment outlook.
b. What factors could have caused the differences in
i. Labour force participation rate?
ii. Employment level?
iii. Between the period 2012 to 2015, why was the Tasmanian unemployment rate way higher than the national rate?
c. Macroeconomic conditions affect the decisions firms and families make. Why, for example, might a high school graduate from Tasmania enter the job market during an economic expansion, but apply to go to a Technical and Further Education (TAFE) college during a recession? What effect would this decision have on the official measure of the rate of unemployment in Tasmania?
d. The diagram below shows the Australian employment level for different age groups. Which group tend to have above -average unemployment rates, and which groups tend to have below -average unemployment rates? Explain the reason for these differences.
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