Economic Principles

Question 1 – Article Analysis i. Read the followin" rel="nofollow">ing articles and write a summary of each article that highlights the main" rel="nofollow">in economic issue(s) bein" rel="nofollow">ing discussed. “RBA governor Philip Lowe only sees one way to solve Australia's housin" rel="nofollow">ing affordability problem” at https://www.busin" rel="nofollow">inessin" rel="nofollow">insider.com.au/lowe-housin" rel="nofollow">ing-affordability-2017-4 “Sydney squeeze: Is rent control the answer to the housin" rel="nofollow">ing affordability crisis?” at http://www.abc.net.au/news/2017-03-21/sydney-squeeze-affordable-housin" rel="nofollow">ing-rent-controloptions/8370364 (4 marks) ii. Discuss three (3) of the factors that have contributed to the unaffordability of housin" rel="nofollow">ing in" rel="nofollow">in Australia and three (3) approaches that policy makers have put forth to address the issue of housin" rel="nofollow">ing affordability. (3 marks) iii. Usin" rel="nofollow">ing a demand and supply diagram for the housin" rel="nofollow">ing or rental market in" rel="nofollow">in Australia, illustrate the effect of one of the factors that have contributed to the rise in" rel="nofollow">in housin" rel="nofollow">ing or rental prices in" rel="nofollow">in Australia. Briefly explain" rel="nofollow">in your diagram and state which side of the market is bein" rel="nofollow">ing affected and why and the effects to equilibrium price and quantity. (Label your diagram fully and use realistic axes labels. Give your diagram a title. Note – you do not need to use actual data for this question). (3 marks) 3 Question 2 – Rental Market Analysis i. Usin" rel="nofollow">ing a demand and supply diagram for the market for rental properties, illustrate and explain" rel="nofollow">in the effect of a (bin" rel="nofollow">indin" rel="nofollow">ing) rent ceilin" rel="nofollow">ing. (Label your diagram fully and use realistic axes labels. Give your diagram a title). Your analysis should discuss the welfare effects on this market and the changes to quantity demand and supplied. (6 marks) ii. List and briefly discuss 2 alternative mechanisms that may help to ration the rental stock when the free-market price is prevented from achievin" rel="nofollow">ing a market-clearin" rel="nofollow">ing equilibrium. (2 marks) iii. Discuss how the quality of the rental stock may be affected by the implementation of a rent ceilin" rel="nofollow">ing? (2 marks) (10 + 10 marks) Total 20 marks