MARKET MICROECONOMICS Principles

BUSS102 MARKET MICROECONOMICS Prin" rel="nofollow">inciples Session 1, 2017 Tutorial Presentation: Group 5 Due: Week 10 Tutorial Class 1. A recent Australian government-commissioned health report shows that tooth decay among children and low in" rel="nofollow">income earners has risen by 10% sin" rel="nofollow">ince 2000. Should the government subsidise dental care for children and low in" rel="nofollow">income earners? Critically discuss. Use appropriate economic tools, in" rel="nofollow">includin" rel="nofollow">ing diagrams, studied in" rel="nofollow">in this unit to illustrate your arguments. 2. In 2010, the Australian government imposed a tax on Alcops to reduce teenage bin" rel="nofollow">inge drin" rel="nofollow">inkin" rel="nofollow">ing and alcohol-related harms and hospitalization, and also to raise tax revenue. However, by the end of the fin" rel="nofollow">inancial year no reductions in" rel="nofollow">in teenage bin" rel="nofollow">inge drin" rel="nofollow">inkin" rel="nofollow">ing and alcohol-related harm were recorded and, moreover, the revenue raised from the tax was 6% less than predicted. a. As an economist, are you surprised about the outcome of the government’s tax policy? Critically discuss. Use the demand and supply model and other appropriate microeconomic tools you have learned in" rel="nofollow">in this unit to illustrate your argument. b. Who bore a greater burden of the tax, the buyers or sellers of Alcops? Was the outcome of the tax efficient? c. What other policy could the government implement to reduce teenage bin" rel="nofollow">inge drin" rel="nofollow">inkin" rel="nofollow">ing and alcohol-related harm and hospitalization? Explain" rel="nofollow">in. Price (dollar per tonne) Quantity demanded (kilo tonnes) Quantity supplied (kilo tonnes) 100 2,000 0 150 1,400 600 200 1,200 800 250 1,000 1,000 300 800 1,200 350 600 1,400 400 0 2,000 3. The table shows the demand and supply schedules for US wheat market. The US Farm Bill 2012 in" rel="nofollow">indicates that the domestic price of wheat will be set at $300 per tonne, which is above the market equilibrium level of $250 per tonne, in" rel="nofollow">in order to support for domestic wheat growers. At the market equilibrium, 1,000 kilo tonnes (Kt) are supplied. a. The US Farm Bill 2012 in" rel="nofollow">indicates that the domestic price of wheat is set at $300 per tonne, which is above the market equilibrium level of $250 per tonne, in" rel="nofollow">in order to support for domestic wheat growers. On a graph, show if it creates a shortage or a surplus in" rel="nofollow">in the market for wheat, and explain" rel="nofollow">in why and by how much. b. On a graph, explain" rel="nofollow">in how the price control in" rel="nofollow">in the US would change the consumer surplus, producer surplus, and deadweight loss in" rel="nofollow">in the domestic wheat market. Assume that the US does not trade wheat in" rel="nofollow">internationally. Also, calculate the changes in" rel="nofollow">in consumer surplus, producer surplus and deadweight loss. (Remember 1 kilo tonne = 1,000 tonnes) c. Is the outcome of the US Farm Bill fair? critically discuss.