MICROECONOMICS ASSIGNMENT

Question 1 - Read Attachment 1

Answer the following questions. Use diagrams where appropriate. [Assume that the Australian grape and wine industries are perfectly competitive markets]:

Use demand and supply models to illustrate and explain the following: [Use the demand and supply model for a domestic market]:

a. Discuss any demand-side and/or supply-side factors that can explain the recent change in the price of grapes.

b. Illustrate and explain the impact these changes have had on the price and quantity traded of grapes?

c. What impact has these changes in the grape market had on the price and quantity traded of domestic wine?

Question 2 - Read Attachment 2

a. Use the demand supply model to explain how changes in demand could cause seasonal variation in the equilibrium price of oil.

b. Use the demand supply model to show how the extent of seasonal variation in oil prices can depend on the elasticity of supply. Why would ' ....a shortage of refining and storage capacity' cause greater seasonal variation in oil prices?

Question 3 - Read Attachment 3

a. In attachment 3 two possible explanations for the higher price of pork are proposed. Suppose you have data on the market equilibrium price and the total quantity traded of pork over time. Using this data would it be possible to distinguish between the two possible explanations to say which is correct?

b. Suppose that the possible explanations for the higher price of pork were a higher price of grain or higher incomes of consumers in China. Again using just data on the market equilibrium price and total quantity traded of pork over time, would it be possible to distinguish between these two possible explanations to say which is correct?

Attachment:- Readings.rar