Daw a supply and demand diagram to analyse

Assignment Help Accounting Basics

Reference no: EM132642278

ECO 100 Economics for Business - Polytechnic Institute Australia

Assessment: Case Study and Research Essay

a) Select a product, a good or a service.

Select Petrol or Cigarettes or Alcohol or Cars or Sugar (in the UK there is a sugar tax). An example of a service is a Noise tax on airline flights. Another is the Luxury Car tax in Australia.

RESEARCH THE BEST PRODUCT TO USE
b) Analyse the factors affecting the supply of and demand for the selected product.

EG petrol
Demand;
• Define demand
• Illustrate how a change in Price causes a shift along the curve
• How other factors cause a shift to a new curve.
• Demand for petrol is affected by Substitution effects (Petrol vs electric cars and diesel as well as public transport) Complement effects (Cars and petrol and service station supermarkets) and it is a normal good so as incomer increases demand increases

Use Diagrams
Supply;
• Define supply
• Illustrate how a change in Price causes a shift along the curve
• How other factors cause a shift to a new curve.
• Supply of petrol is affected by, OPEC (define and explain how and why it affects supply of petrol) Oil is a finite resource look up "peak oil", which are the countries that supply oil. Which are the oil companies that operate service stations in Australia. Does Australia produce any oil? Where does Australia's oil petrol come from?

c) Describe the elasticity of demand for the product.

• Define price elasticity of demand.
• Distinguish between inelastic and elastic demand.What happens to price elasticity along a demand curve, at lower price compared with higher price?
• Explain the elasticity of demand for petrol. What about cross elasticity and income elasticity? What other factors affect elasticity eg. before holidays (what happens to the price at the start of holidays?).

d) Assume the government places an excise tax on this product.

• Research the rate of tax on petrol and the change in this rate overtime.
• Which levels of government implement this tax on petrol?

e) Daw a supply and demand diagram to analyse the effect that this tax will have on its price and quantity sold.

• Draw a line with arrows at each end to show the size of the tax,
• Draw a line with an arrow to show the effect of the tax on the supply curve
• Shade in the rectangle illustrating the amount of tax revenue received by the government.
• Shade in the part of this rectangle paid by consumers of petrol

f) What is other consequences of the tax?

Attachment:- Economics for Business.rar

Reference no: EM132642278

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