Economics Assignment

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

1Answer 4:
ECONOMICS ASSIGNMENT
Table of Contents
Answer 1:...................................................................................................................................2
Answer 2:...................................................................................................................................5
Answer 3:...................................................................................................................................8
Answer 4:.................................................................................................................................12
References:...............................................................................................................................16

2Answer 4:
ECONOMICS ASSIGNMENT
Answer 1:
The report of “Tourism Investment Monitor 2016-17”, under Tourism Research
Australia (TRA), represents the number as well as value of some significant projects during
the year 2016-17. This project is related to tourism investment pipeline of this country and
considers tourism infrastructure as well as various categories of investment. According to the
report, total amount of investment pipeline in this sector was $ 37.8 billion to undertake 294
projects. Within this investment, $10.1 billion was invested in aviation sector for conducting
19 projects regarding the airport infrastructure. In addition to this, for 83 infrastructure
projects related to arts, recreation and business services $17 billion was invested (McLennan,
Becken and Moyle 2017). Furthermore, $10.8 billion was invested for accommodation
considering 102 projects. Foreign investors support the pipeline investment, especially
accommodation projects and provide significant amount of money for supporting the project.
In this context, it is essential to describe the tourism environment of this country briefly. This
is because tourism sector plays significant role to develop economic condition of Australia by
attracting investors. The entire tourism sector experienced improvement between 2011-2012
and 2016-17. The demand for hotels, motels along with serviced apartment was increased by
21 % within this period (Pham, Nghiem and Dwyer 2017). In addition to this, the number of
inbound passengers on airlines as well as passengers on domestic flights and expenditure on
total tourism also increased significantly within this time gap. To meet this huge demand, the
specified sector had also intended to increase the number of room supplied between 2011 and
2016. Consequently the occupancy rates of tourism section increased in Sydney and
Melbourne by significant amount. Therefore, it is expected that the sector will develop
further as the demand from foreign visitors will increase in future.

3Answer 4:
Price in tourism industry
Amount
S
D
P1
Q1 Q2
P0
ECONOMICS ASSIGNMENT
According to Tourism Forecasts (2017), the expenditure in tourism sector will be
increased at 6.3 percent per annum. As a result, a strong amount of investment is required in
tourism industry of this country for maintaining adequate supply with growing demand.
Therefore, this concept can be described with the help of basic microeconomic
concept of demand and supply. The economy of a particular sector reaches to equilibrium
point when demand equates with supply. However, this stable situation can be changed if the
respective sector experiences excess demand or excess supply. In tourism sector, excess
demand occurs and this further creates insufficient accommodation for tourists. In this
situation, hotel price as well as flight fare also increase significantly (Williams 2017). The
situation of excess demand can be described with the help of following diagram.
Figure 1: Excess demand in tourism sector of Australia
The above figure represents demand and supply in tourism sector of Australia. The
sector experiences Q1Q2 amount of excess demand in this sector at P1 price. This further