Economics Report 2022

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

ECONOMICS1
Table of Contents
Introduction........................................................................................................................2
Question 1..........................................................................................................................2
Question a: Hostilities in Middle East and impact on petrol and passengers’ car
market............................................................................................................................2
Question b: Relation between electric car and petrol car market..................................4
Question 2..........................................................................................................................5
Question a: Government policy and economic output...................................................5
Question b: Long term determinants of economic growth and role of government
policy..............................................................................................................................6
Question 3..........................................................................................................................8
Question a: Burden of taxation......................................................................................8
Question b: Market structure of Australian grocery supermarket..................................9
Conclusion.......................................................................................................................10
References.......................................................................................................................11

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Introduction
The report aims to discuss impact of some selected economic event on individual
market and the overall economy using concepts drawn from both microeconomics and
macroeconomics. These are done by answering three specific question. The first
question is related to demand, supply and equilibrium dynamics of market. First part of
the question discusses impact of hostilities in Middle East on petrol and passenger cars
market of Australia. The second part of the question discusses effect of a lower
affordable price of electric cars on the market for petrol cars. The second question
relates to the concept of economic growth. It discusses impact of specific government
policy on economic output. Along with this, the section discusses long term determinant
of economic growth and role of government policy in determining economic growth. The
third question makes a comparative analysis of burden of tax imposed on cigarette and
coffee. This part of the paper additionally discusses supermarket structure in Australia.
Question 1
Question a: Hostilities in Middle East and impact on petrol and passengers’ car
market
Hostilities in Middle East interrupts the supply of oil in Middle East. As Australia is
highly dependent on imported crude oil from Middle East, disruption in oil supply in the
Middle-east reduces the supply of crude oil in Australia. The petrol market in Australia is
therefore likely to suffer a crisis of shortage of petrol. The shortage of petrol increase
petrol price in Australian market. As petrol price increases, there is an increase in cost
of running passenger cars with large engines that run on petrol (Cowell 2018). Demand
for passenger cars therefore decreases lowering and quantity sold of passenger cars.
The market scenario in petrol and passenger cars is described in the following two
figures.

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Figure 1: Market for petrol
(As created by Author)
Figure 1 depicts the state of Australian petrol market after the outbreak of
hostilities in the Middle East. The demand for petrol is given by the downward sloping
line DD and supply of petrol is given by the upward sloping line SS. From the demand-
supply force, the market attains equilibrium at point E1. Because of the outbreak of
hostilities in Middle East there is likely to be a disruption in supply of crude oil in
Australia. In response to this, supply of petrol falls (Baumol and Blinder 2015). This
shifts the supply curve leftward to S1S1. The new equilibrium in the market is attained at
E2. Because of the event, equilibrium price of petrol increases to P2 and the equilibrium
quantity falls to Q2.
Figure 2: Market for passenger cars