Application of Economic Theories in Retail Industry of Australia and Health of Indian Economy

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Author’s Note

1ECONOMICS ASSIGNMENT
Table of Contents
Introduction......................................................................................................................................2
Part A: Microeconomics..................................................................................................................2
Question 1....................................................................................................................................2
Question 2....................................................................................................................................3
Question 3....................................................................................................................................4
Question 4....................................................................................................................................4
Part B: Macroeconomics..................................................................................................................5
Question 1....................................................................................................................................5
Question 2....................................................................................................................................6
Question3.....................................................................................................................................8
Part C: Heath of Indian economy....................................................................................................8
Question1.....................................................................................................................................8
Question 2....................................................................................................................................9
Question 3..................................................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

2ECONOMICS ASSIGNMENT
Introduction
The present assignment focuses on the application of economic theories in the retail
industry of Australia. The study also analyzes on the current health of the Spain economy
through various macroeconomic indicators such as unemployment rate, GDP growth rate. The
assignment also assess on how India is still the fastest- growing nation in the globe gripped by
uncertainty. discusses about the phase of business cycle that the Indian economy has
experienced in the year 2016.
Part A: Microeconomics
Question 1
The two main supermarket chains namely Coles and Woolworths control near around
70%-80% of the market share of the food retail industry. These two supermarket chains operates
under oligopolistic market structure. Under this market structure, few sellers sell homogenous or
differentiated commodities. Coles and Woolworths dominate this market and have control over
product price. There has been existence of barriers in entry but have no hurdles in exiting this
industry. Despite globalization and international firms searching for new firms, no entities has
merged this Australian food retail sector. Even the firms operating in this industry are
interdependent on one another in terms of decision -making. However, action of Coles has
impact on Woolworths while determining price as well as output levels.

3ECONOMICS ASSIGNMENT
MC
MC2
D=AR
MR
Q1
P1
Quantity
Price
Figure 1: Oligopolistic market structure
Source: ( As created by Author)
The assumption that rival entity enhances its price, other firms might not follow. This is
turn leads to kinked demand curve. The upper portion of AR curve is price elastic than lower
portion. This is because the firms operating in this market do not follow high price but at lower
price these firms reduce prices too. Coles and Woolworths maximizes profit at Q1 and P1 where
MR= MC (Economicshelp.org. 2018).
Question 2
Under oligopolistic market structure, entities have the power to influence prices. The tries
to avoid price competition due to price war (Sloman, Norris and Garrett 2013). These entities
usually follow price rigidity policy, which depicts the circumstances where price apt to remain
fixed irrespective to demand and supply change conditions. If one entity tries to decrease price,
competitors might reduce their price. Moreover, if an entity tries to increase price, others might