Demand And Supply For Alcohol Products Task Assignment 2 consists of two problem questions (worth 15 marks each) based on text material. Text material which may be relevant to the questions may be drawn from any of text chapters 1-10.
Question
Answer the following:
Question 1
Assume the government wishes to reduce alcohol consumption by considering a higher excise tax on alcohol products. Collect information on estimates for the price elasticity of demand for alcohol products. Based on these elasticity estimates illustrate using a demand/supply diagram(s) who bears the burden of the higher excise tax, consumers or producers.
As an alternative for reducing alcohol consumption assume the government is alsoconsidering the imposition of a minimum price on alcohol products. Using ademand/supply diagram illustrate the consequences of imposing a minimum price on alcohol for the consumption of alcohol products. Provide comment on the relative merits of increasing excise taxes compared to imposing a minimum price on alcohol products for reducing alcohol consumption.
Question 2
a) Assume that in long-run equilibrium the minimum point of the LRAC curve for a table manufacturer’s tables in $200 per table. Under conditions of monopolistic competition, will the long-run price of a table be above $200, equal to $200 or less than $200. Explain your answer.
b) What are of the characteristics of an oligopolistic market? Give three examples of industries with oligopolistic firms in Australia. Justify your examples by relating them to the characteristics of oligopolistic firms.
c) What are the characteristics of a monopolistically competitive market? Give three examples of industries with monopolistically competitive firms in Australia. Justify your examples by relating them to the characteristics of monopolistically competitive firms.
d) Assume that two firms make up a natural duopoly. What are the conditions which may make this occur? Sketch the market demand curve and cost curves that describe the situation in this market and that prevent other firms from entering.
Rationale
The questions address the following learning outcomes:
- be able to apply demand and supply analysis to make a range of market related decisions
- be able to explain and defend why it is important to understand the structure of the market in
which a firm operates - be able to critically examine and demonstrate why it might be necessary for government to
intervene in the production of goods and services and in the distribution of income
Marking criteria
Learning objective:
Academic writing.:
High Distinction(85%+)
Highly developed skills in expression and presentation of ideas. Fluent writing style. No major grammatical and spelling errors. All references, including recent literature, cited and used accurately.
Distinction (75%-84%)
Well-developed skills in expression and presentation of ideas. Fluent writing style. No spelling errors, minor grammatical errors. Relevant references cited and used accurately.
Credit (65%-74%)
A satisfactory standard of expression. Relatively clear and concise in expression of ideas. Few spelling and/or grammar errors. Majority ofreferences are presented and used accurately.
Pass (50%-64%)
Some inconsistency in sentence structure. Clarity of expression could be enhanced by some revision. Several spelling errors and/or poor grammar. Very limited references cited and used.
Fail (Less than
50%)
50%)
Poor communication of ideas due to careless writing and lack of proof-reading. Too many spelling and/or grammar errors. References not included or inappropriately applied
Learning objective:
Research, content & knowledge related to learning outcomes.
High Distinction(85%+)
Skilful use of data, theoretical knowledge and ongoing debate on the issue, and they are well integrated Contains insights and awareness of deeper and more subtle aspects of the relevant theory. There is clear evidence of researched/read more widely beyond the core materials
Distinction (75%-84%)
Skilful use of data, theory and recent debate, but they are not well integrated. Presents issues in the broader context and demonstrates breadth and depth of understanding of most aspects of the essay topic. There is evidence of having read beyond the core materials.
Credit (65%-74%)(85%+)
Demonstrates knowledge of principles and concepts. Demonstrates good understanding of the relevant theory presented in the texts and readings.
Pass (50%-64%)
Contains limited use of theoretical knowledge. Fails to demonstrate awareness of market trends. While some literature is presented they purely descriptive and they are not well integrated.
Fail (Less than 50%)
Fails to demonstrate knowledge of key principles and concepts. There is very little evidence of having read material presented in core texts and readings. Contains only a few ideas and they are presented uncritically in a purely descriptive manner.
Learning objective:
Quality of arguments & analytical skills related to learning outcomes.
High Distinction (85%)
Provides well-argued articulated statements with supporting evidence. Evidence of originality and independent thought. Has highly developed analytical skills and consistently demonstrates high
levels of critical analysis. Demonstrates ability to reflect on conclusions and their policy implications.
levels of critical analysis. Demonstrates ability to reflect on conclusions and their policy implications.
Distinction (75%-84%)
Provides well-argued and articulated statements, but the use ofsupporting evidence is not very recent. Evidence of independent thought. Has good analytical skills and is capable of good levels of
critical analysis. Able to justify conclusions. Able to synthesise and draw conclusions from multiple perspectives.
critical analysis. Able to justify conclusions. Able to synthesise and draw conclusions from multiple perspectives.
Credit (65%-74%)
Well-reasoned arguments based on broad evidence from theory and practice. Demonstrates some evidence of critical analysis and evaluation. Able to apply fundamental concepts and to draw and justify conclusions.
Pass (50%-64%)
Arguments based on limited evidence. Demonstrates some evidence of analytical and evaluative skills but development of arguments is limited. Able to apply fundamental concepts and to draw and justify conclusions.
Fail (Less than 50%)
Little demonstrated evidence of ability to construct clear andcoherent arguments. Little (or no) evidence of analytical and evaluative skills. Fails to draw on fundamental concepts and to justify conclusions.
Presentation
Answers should be typed and diagrams must be clear and neat and preferably drawn
electronically. Hand-drawn diagrams are acceptable.
Requirements
APA referencing must be used when citing literature. Assignments must be submitted
through Turnitin.
Presentation
Answers should be typed and diagrams must be clear and neat and preferably drawn
electronically. Hand-drawn diagrams are acceptable.
Requirements
APA referencing must be used when citing literature. Assignments must be submitted
through Turnitin.
Answer ( 1 )
Introduction
The taxation on alcohol products aims to reduce the consumption by a population to eradicate the ill effects
of drinking. To find out the price elasticity of demand of alcohol information on levels of consumption in a
population is needed which is quite diverse.
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However in Australia at present few of the important and valuable
data are not available in the field of public health. For instance, the sales data of alcohol is known to be
collected and analyzed by the alcohol beverage industry, but it is not accessed by the public.
A variety of taxes is imposed on the alcohol products like excise tax and Wine Equalization Tax (WET). It is
argued that the taxation should be based on volume so that all alcoholic beverage can be taxed equally.
1. Price elasticity of demand for alcohol products
The consumption of alcohol in Australia is one of the highest in the world. And it is ranked in the top 30
highest alcohol-consuming countries in the world out of 180. A number of reviews have prompted that the
mean price elasticity of demand for alcohol products in Australia are: -0.7 for spirits, -0.4 for beer and -0.7 for
wine. While for overall the as per the data derived in 2007 the price elasticity was calculated to approximately
−0.5 (Gallet, 2007; Wagenaar et al., 2009; Fogarty, 2010). This suggests that a 10% increase in the alcohol
price will lead to a fall in the consumption of the alcohol by 5%. But there are other factors which should be
taken into account as the price elasticity of alcohol is also depended upon the drinking culture, economic
conditions and popularity of different beverages that have varied social meanings (Casswell, 1999). In
economic modeling, it was also provided that a 10% rise…[/swpm_protected]