Reference no: EM132203771

Questions

(a) Suppose that a perfectly competitive industry becomes a monopoly. Describe the effects of this change on price, quantity, consumer surplus, producer surplus and deadweight loss.(8 marks)
In answering this question, as a minimum, you need to
• discuss the key features of each market structure such as number of sellers, type of product, and entry conditions
• explain how short run and long run profits or lossesmight ariseby using diagrams
• compare price, quantity, consumer surplus, producer surplus and deadweight loss in both market situationswith graphs

(b) Choose an Australian industry that represents oligopoly.Justify your example by relating them to the characteristics of oligopoly market. Why is it that in some oligopolistic industries in Australia there is a large amount of advertising while in others there is very little? (9 marks)
As a minimum, you should
• discuss key features of oligopoly and the role of advertising in oligopoly
• provide a brief description of the Australian industry and the impact of advertising
• justify by providing actual and reliable data

(c) What are the reasons for housing affordability becoming an increasing problem over the past few decades in Australia? Explain some of the factors that contribute to restrictions in supply of housing in Australia's capital cities. Using diagrams analyse the solutions to housing affordability problem.

In answering this question, you need to
• discuss housing affordability crisis in Australia with the demand and supply side factors
• explain the solutions that have been attempted or are proposed to address housing affordability
• explain the effect of first home owners' subsidy on price and quantity (subsidy with perfectly elastic and perfectly inelastic supply)
• Use housing market data to justify your answer

Additional marks
Overall presentation of work, especially use of graphs, clear written expression.

Appropriate use of referencing.