Advanced Economics Australia Question Answer 2022

Running head: ADVANCED ECONOMICS
ADVANCED ECONOMICS
Name of the Student
Name of the University
Author Note
Course ID:

1ADVANCED ECONOMICS
Table of Contents
Answer to Question 1(a)............................................................................................................2
Answer to Question 1(b)............................................................................................................3
Answer to Question 2(a)............................................................................................................4
Answer to question 2(b).............................................................................................................6
Answer to Question 3(a)............................................................................................................6
Answer to Question 3(b)............................................................................................................8
Reference..................................................................................................................................10

2ADVANCED ECONOMICS
S1
S
D
P1
P
Q1
E1
Q
E
Price
Quantity
D
S1
S
Answer to Question 1
(a)
Recently, the tension caused in Saudi Arabia because of the Iran attack may have an
impact on petrol as well as passenger petrol cars market in Australia. Due to the attack, the
petrol price is rising all over the world (Economictimes.com 2019). The impact has clearly
illustrated in the diagram below:
In the case of the petrol market in Australia
Figure 1: Impact of petrol prices in the Australian market
(Source: Goodwin et al. 2015)
The above diagram shows the effect of the rise in petrol price in the market in
Australia. The actual supply anddemand curve was SS and DD, respectively. The vertical and
horizontal line measures the price and quantity. The original price was at P. The equilibrium
was at E.Now, the cost of petrol increased to P1. The market now wants to adjust and obtain

3ADVANCED ECONOMICS
D1
S
D
P1
P
Q1
E1
Q
E
Price
Quantity
D
D1
S
equilibrium. Consequently, the supply curve moves to the left, thus the quantity supply falls
from Q to Q1.
In case of passenger petrol cars market in Australia
In this case, the demand of the people for passenger cars may decrease the petrol
price in future. With the help of the graphical model, the effect is presented below:
Figure 2: Change in demand in the Australian passenger cars market
(Source: Goodwin et al. 2015)
In this figure, the price effect is studied. The people of Australia will continue to
demand a passenger car; therefore, the demand curve moves to the left to D1D1. Again, the
marketplace will want to attain equilibrium; therefore, the price of petrol will fall. Thus, the
new equilibrium quantity will be at Q1 when the original equilibrium price is at P1.
(b)
Australia recently is selling more vehicles that are electric and the government there
has predicted that by 2035, the sale of electric cars will rise by 50 per cent. Iran currently the