Economics Assignment

This economics assignment explores the concept of price elasticity of demand for housing, tobacco, and caloric products in the Australian economy. It also discusses the impact of monopoly power on organizations and how they deal with customers. The study highlights the importance of understanding these economic factors and their implications for the economy.

Running head: Economics Assignment
Economics Assignment
Name of the student
Name of the ID
Course name

1
Economics Assignment
Table of Contents
Introduction......................................................................................................................................2
Question 1: Estimates of price elasticity of demand for three goods and services and comment on
the magnitude of these estimates with standard determinates of price elasticity of demand..........2
Question 2: Explaining the concept of monopoly from an organizations perspective and how they
are dealing with customers..............................................................................................................5
Conclusion.......................................................................................................................................7
Reference list...................................................................................................................................8

2
Economics Assignment
Introduction
The concept of the elasticity is a significant factor for the development of degree of
responsiveness for any goods and services. The main aim of this study is to highlight the
incorporation of better understanding of the term price elasticity and how the Australian
economy is dealing with the elasticities. The study is also significant in the sense that it will also
highlight the importance of the monopoly and the contribution of monopoly from the perspective
of Diamond Energy Company regarding the monitoring power of the government as well as the
private organizations. Through the study, it will be highlighting the importance of the economic
situations that will allow the smooth movement and performances of the economy.
Question 1: Estimates of price elasticity of demand for three goods and services and
comment on the magnitude of these estimates with standard determinates of price elasticity
of demand
The estimated price elasticity of the new housing supply is 7.7 for houses and 3.7 for
units. The elasticity estimates from the international studies varies. Compared to the study done
in US and UK, Australia is having low elasticity of demand and the price is too high. The
demand of housing condition in the Australia is becoming poorer for the low income group. On
the other hand, the housing index is increasing the affordability for the high and low income
group. 1% increase in the price of real housing but according to elasticity estimates, will produce
3.9% increase in the house prices but there is little increase in the stock of price of houses by 0.5-
0.9% (Ahuri.edu.au, 2019). Condition of house affordability was not improving in the country.
In 2014-25015, the 320000 public house dwellings in Australia and 154,000 people was eagerly
waiting to get the public dwellings (Ahuri.edu.au, 2019). Growth of required housing stock was

3
Economics Assignment
not concentrated on the areas that it required the most. The economy of Australia was not being
able to concentrate on the growth of housing in the areas that required the most.
Figure 1: Building approvals per 1000 population from 2005-2014
(Source: Ahuri.edu.au, 2019)
The above graph is showing the fact that in Australia, rate of building approvals per 1000 is
having low rate of interests and even the policy of the government is also aligning with the
common objectives. In the initial phases of development of the economy the approval of the
housing was going in the same direction in both metro and regional areas. Due to the global
economic crisis in the year 2008-2009, the building approvals decreased. After 2009 the
approvals increased by little amount and started to fall again by huge number. The fall in the
housing prices are increasing in the sense that through the development of better improvement in
the government policy would have entertained the development of the housing prices in
Australia.

4
Economics Assignment
Figure 2: Real unit price in Australia
(Source: Ahuri.edu.au, 2019)
The above table is showing the fact that the housing stock in Australia economy is having but the
lack of government policies is making the situation problematic in nature. The number of hou8se
approvals in the economy is not up to that mark and up to that level. The government is maybe
holding the building approval for the economy thus making the situation more problematic in
nature.
Tobacco is the only product in the economy that is highly elastic in nature. Small unit
increase in the price is capable of decreasing the demand but however, in Australia and global
countries, the study among the adults has shown the fact that price rise has reduced the number
of cigarette consumption but it did not declined totally. On the other hand, in most of the
developing nations, the high price of the tobacco has reduced the level of the frequency but it
could not totally stop the number. Through the incorporation of better policy incorporation from
the government would have not allowed the economy to keep the quantity decreased. Recent
study find the result that price elasticity of tobacco among the youths is around the range of –0.5
and –1.2%. The price is negatively inelastic in nature (Tobacco in Australia, 2019).

5
Economics Assignment
Among most of the developed nations growth in the consumption of caloric products are
increasing and many developed countries are now topping the list. Own price elasticity for cold
drinks was −1.37%. The price increase by 10% will automatically reduce the consumption by
13% (Guerrero-López, Unar-Munguía&Colchero, 2017). Through the incorporation of better
innovation in the economy, the consumption of cold drinks in the Australian counterpart is
decreasing in the sense that though Australia is batting with the the consumption of unhealthy
foods, the health risk is increasing by huge margin.
Comparing to the economic factors of elasticity the development of price is one of the big
factors. The involvement in the development of the business of the sugar based products is
decreasing in the sense that it will align with the price of products. Price of products is important
in the sense that it will be highlighting in the sense that it will be improving the development of
the business that will be improving the price development is improving in the demand of the
housing in the prices in Australia is increasing in the sense that it will be innovating the
development of the business.
Question 2: Explaining the concept of monopoly from an organizations perspective and
how they are dealing with customers
Establishment of the monopoly power within any economy is going to identify the power
and how the economy is going to tackle all the negative externalities. This is important in the
sense that through the development of the monopoly organizations working in the electricity and
the gas industries are able to identify the resource utilization and Diamond Energy is one of the
top rated company in the economy that is indulging the concept of the electricity supply within
the economy. It is important in the sense that through the development of better business gaining
the monopoly power so that they can provide better services to the customers (Auer& Petit,

6
Economics Assignment
2019). It is important in the sense that it will be highlighting the development of the power that
the company will be hosting special power that will be allowing the company to indulge in the
development of the business and they will be able to highlight and segregate the pricing of the
products based on the needs of the customers. It is important in the sense that through the
development of monopoly the involvement of better accessibility is important.
On the other hand, the company is providing electricity to the economy of Australia, the
monopoly power will make the company to increase their prices and in order to highlight the
incorporation of the business. The consumers will have to pay the high price in spite of having
low consumer surplus. Through the development of monopoly power, the price of the product
may be high for all the consumers to afford but still the company will be providing the best
quality of products to the customers (Diamondenergy.com.au, 2019). It is highly important in the
sense that through the innovation in the technologies that are to be used will determine the
development of the products so that the economy will be dealing with better information and
high efficiency will be there in supplying the services.
Through the establishment of the monopoly power, the people those who are belonging
from the low and middle income group are going to indulge the development of resource
utilization and how the company is utilizing the available resources is one of the key question. It
is expected that the company will be providing best quality of services, but in some case the
companies bring in corruptions within the economy by making a segregation in the price of the
products based on the tenure of the customers and by geographical location. The important
feature of the development of the monopoly lies in the identification of stakeholders in the
economy so that they can get the best raw material supplier that the company will be getting in

7
Economics Assignment
so that they can produce the best quality of services. Through the incorporation of the monopoly,
incorporation of technology will bring in the development of the business.
In order to highlight the incorporation of monopoly, the government will have to come up
so that no corruption can happen within the economy regarding the development of better
business and provision of the better services can be possible. Through the development of better
improvement in the innovation regarding setting the price of the products so that the indulgent of
better improvisation can be possible. Through the amendment of the policy of price ceiling the
monopolists will not be able to increase their prices as per their requirements. Through the
development of better resources the monopoly will be willing to indulge the development of
better resource utilization and the monopoly will be willing to incorporate the development of
better marketing of the products. It is important for the development of resources to be aligned
and distributed so that the economy and the Diamond Energy will be willing to increase the
innovation that will bring upgraded technology that will not only increase the consumer surplus
but also will allow producer surplus to win.
Conclusion
The whole study is showing the fact that through the development of monopoly the
economy sometimes gets the benefit of getting high skilled employees and advanced level of the
technology so that the goods will be produced. Better marketing of the products will be always
willing to indulge to bring in effective challenges while making innovation in the economy. It is
always important to see the development of better introduction of resolving the economic
resources and they will be aligned to improve the business policies that will definitely introduce
the incorporation of better policies. Through the improvement in the business the monopoly will
be able to identify the main gaps in the economy. The price is going to identify the resources that

8
Economics Assignment
will increase the business innovation. This is important in the sense that it will allow the
economy to bring in better technological upgradation that will easily increase the innovation in
the business.

9
Economics Assignment
Reference list
Ahuri.edu.au (2019). Retrieved 13 April 2019, from
https://www.ahuri.edu.au/__data/assets/pdf_file/0012/13242/AHURI-Final-Report-281-
Housing-supply-responsiveness-in-Australia-distribution-drivers-and-institutional-
settings.pdf
Auer, D., & Petit, N. (2019). Two Systems of Belief about Monopoly: The Press vs. Antitrust.
Cato Journal, 39(1), 99-132.
Bamberger, K. A., &Lobel, O. (2017). Platform market power. Berkeley Tech. LJ, 32, 1051.
Culpepper, P. D., &Thelen, K. (2018). It’s Hard to Unplug from the Matrix: Consumers and the
Politics of Platform Power. working paper, Oxford/MIT.
De Hert, P., &Thumfart, J. (2018). The Microsoft Ireland Case and the Cyberspace Sovereignty
Trilemma. Post-Territorial Technologies and Companies Question Territorial State
Sovereignty and Regulatory State Monopolies. BRUSSELS PRIVACY HUB,
WORKING PAPER, 4(11).
Diamond Energy | Supporting new renewable energy . (2019). Diamondenergy.com.au.
Retrieved 14 April 2019, from https://diamondenergy.com.au/
Fitzgerald, B. F. (2017). Software as discourse: The power of intellectual property in digital
architecture. In Copyright Law (pp. 119-168). Routledge.
Genakos, C., Kuehn, K. U., & Van Reener, J. (2018). Leveraging monopoly power by limiting
interoperability: theory and evidence from computer markets.

10
Economics Assignment
Guerrero-López, C., Unar-Munguía, M., &Colchero, M. (2017). Price elasticity of the demand
for soft drinks, other sugar-sweetened beverages and energy dense food in Chile. BMC
Public Health, 17(1). doi:10.1186/s12889-017-4098-x
Kirkwood, J. B. (2017). Market Power and American Express. U. Miami Bus. L. Rev., 26, 17.
Kirkwood, J. B. (2018). Market Power and Antitrust Enforcement. BUL Rev., 98, 1169.
Kurz, M. (2017). On the Formation of Capital and Wealth: IT, Monopoly Power and Rising
Inequality. Monopoly Power and Rising Inequality (June 25, 2017).
Newaz, M. N. (2016). Is there Something Different about the Exercise of Market Power when
Firms Possess IPRs as the Basis of Their Business?. Management, 30(1&2).
Price elasticity of demand for tobacco products - Tobacco In Australia. (2019).
Tobaccoinaustralia.org.au. Retrieved 13 April 2019, from
https://www.tobaccoinaustralia.org.au/13-1-price-elasticity-of-demand-for-tobacco-
produc
Sidak, J. G. (2018). Memorandum: Will the International Trade Commission or the Antitrust
Division Set Policy on Monopoly and Innovation?.
Stiglitz, J. (2017). Inequality, stagnation, and market power. Technical report, Roosevelt Institute
Working Paper.
Warren, G. S. (2018). 1-Click Energy: Managing Corporate Demand for Clean Power. Md. L.
Rev., 78, 73.

11
Economics Assignment