Economics Assignment: Analysis of Economic Concepts and Solutions

This economics assignment solution provides detailed answers to four key economic concepts. The first answer explores economic leverage using the example of Usain Bolt, and analyzes the impact of petrol price increases on the demand and supply of hybrid cars. The second answer delves into the elasticity of demand for computers, contrasting the flexibility of computer demand versus the more rigid demand for Dell computers, and then discusses the implications of inelastic demand using the example of eggs. The third answer examines price ceilings and their impact on apartment markets, followed by an analysis of monopolies and government regulations in Australia. The final answer addresses various environmental issues in Australia, including conservation, waterway health, pollution, and deforestation, highlighting their impact and potential solutions. The solutions provide a comprehensive overview of essential economics principles, supported by relevant examples and real-world applications.

Economics

Contents
Answer 1.....................................................................................................................................................2
Answer 2.....................................................................................................................................................4
Answer 3.....................................................................................................................................................6
Answer 4.....................................................................................................................................................8
Reference...................................................................................................................................................10

Answer 1.
A. This is related to the leverage, in economic leverage means knowing and multiplying the
losses and gains in the business and this is mainly used to increase the wealth and profits as other
people resources and efforts are used. Power of leverage is used by Usain Bolt in this example as
he can mow his land but rather than doing it he opted to hire a person to mow his lawn because
Usain can use his time and efforts in more productive way and can earn more than he invested in
mowing the lawn. This factor is considered as leverage. Usain Bolt can easily mow but then also
he will insist and ask James Bold to work so that Usain bolt can utilize his time and consume the
time in mow his lawn for increasing the activities productivity. Usain bolt will hire James bold to
work for him so that he can utilize his time in more effective and productive way. It will help
Usain bolt to earn more with more productive activity. In case when Usain Bolt has to mow his
lawn but he also has an opportunity to train athletes for the Olympics competition which also
pays him $1,000 for one day and he has to spend only $100 for mow his lawn to another person
to mow. It will be preferable for Usain bolt to use his skills to train the athletes and would give
his 100% efforts to productive activity. It is said that it is beneficial to earn 1% off a 100
people’s efforts than giving own 100% efforts in less productive activity.
B. When the price of petrol increases it will help in increasing the sale of hybrid cars.
Supply and demand factors
In this case, demand shows the inverse relationship between the quantity demanded and
the prices of the products. The demand curve is shown as the downward-sloping curve. In

demand curve, it shifts when the other factors change expect change in price. Supply includes the
direct relationship between the quantity supply and price of the product. It is shown as the
upward-sloping curve. It shifts when the prices change (Coglianese, 2017).
In this case, the change in petrol prices shifts the supply and demand curve of the hybrid
cars. Equilibrium is achieved when the demand is equal to the supply of hybrid cars and in this
case, the other factors are considered as constant. The demand for hybrid cars increases when the
petrol price increase as hybrid cars is more efficient in consumption of fuel. The demand curve
of hybrid cars will shift to right with the increase in demand and in that situation the equilibrium
point will be at point A where the demand and supply will intersect. In this case, the prices and
Quantity of hybrid cars will increase with the rise in the prices of petrol and the supply will be
constant (Trostle, 2010).

Answer 2.
A. Demand for computers or dell computers
The elasticity of demand includes the response of consumers towards purchasing of
products when the price of product changes. It depends on a variety of factors. In Demand for
computers and dell computers, the elasticity of computers will be more. The demand for
computers of dell is less flexible because of brand loyalty for consumers. The demand for
computers will be more flexible as they can purchase any other brands also. The consumer
chooses the products after considering the use and utility of the machine. Consumer purchase the
product after considering the prices and satisfaction with the utility requirement and their
demand. In case of dell computers, customers are more brands conscious. Customers prioritize
the brand name over the utility of the consumers and it will lead to having limited choice of
computers and demand will be in rigid pattern (Hegetschweiler, et al., 2017). In case of change
in prices of computers, consumers will prefer the computer irrespective of the brand they will
respond quickly with the change in prices and in case of dell computers they will have the
rigidity of choice. In order to conclude, consumers who prefer to have dell computers are having
limitation in choices and demand will be rigid and consumers who choose to have computer will
have wider market choice and demand, in this case, will be flexible. It is concluded that the
elasticity of demand for computers will be more elastic and elasticity for dell computers will be
less (Helo, 2004).
Demand for dell computer Demand for computers

b. In this case, the elasticity of demand of 0.1 is elastic demand. When the demand is inelastic,
the prices and revenue of the product move together. When the price of the eggs increases it will
help in increasing the total revenue. Price elasticity of demand changes when the prices of
changes. In case of price elasticity of demand, demand curve is more elastic when prices increase
and demand of the product is more and when the price of the product increase and the quantity
demand is less, the demand curve will be inelastic. Price elasticity is measured by the percentage
change in quantity demanded divided by the percentage change in price. When the demand for
eggs is elastics, the quantity will be affected by the price change. So when the price increase it
will cause in reducing the demand for quantity and it will affect the total revenue. Total revenue
is calculated with the quality demanded and price of the product. In case when the demand is
inelastic, it will effect on the quantity. When the price increase it will slightly impact the quantity
demanded and it will help in increasing the total revenue. When the demand is elastic and
increase in price will impact on reducing the quantity demanded. In this case with the increase in
price, the total revenue will decrease (Soderbery, 2015).

Answer 3.
A price ceiling is an act for controlling the level s of price in the economy and it is associated
with the essential commodities like medicine, housing, clothing, and food. In includes imposing
when the prices are maximum which suppliers can change easily. It is stated that government can
intervene in case when the producers or suppliers of goods charge the exploitative high prices for
earning the exorbitant profits. In order to safeguard the interests of consumers is the main aim of
price ceiling and in overcoming the monopolistic behavior by helping the suppliers.
In this case, the demand curve and supply curve of apartments in the inner city zone. In
this case, P is the equilibrium price and Q is the equilibrium quantity in case of apartments as it
is determined with the demand and supply market forces. It is analyzed that the government has
forced a restriction of P as the maximum price for the apartments on rent. When the prices are
low it states the change and decrease in the supply which changes from Q to Q’s and the demand
will be increased from Q to Q’s. In case of post-price ceiling, the quantity is Qs and Qd changes
in amount with the excess in demand. The producer surplus will decrease and the consumer
surplus increases with the increase in prices. The market conditions will also suffer from the
change in the unaccountable loss (Goldratt and Cox, 2016).

b. A monopoly is defined as when a company and its products which are offered dominate the
other industry or sector in market. It includes the situation in market when only a single business
controls the pricing of the products by considering the demand of the consumers. In Australia, it
is considered as a free-market economy and government of Australia discourages the
Monopolistic market and it is done for avoiding the higher price control on commodities as it
directly impacts the behavior of consumers and their spending (Mankiw, 2014). It is considered
that free-market economy impact the most social benefits and it helps in promoting the
competition which is healthy in the process of business and it helps in producing the products of
high-quality and differentiates with the different price ranges of the products. In an
uncompetitive structure of market, the regulations must be justified as it leads to inefficient
outcomes in the economy.
In case of monopoly, it leads to increase in supply and makes the absence of substitutes
and in market of competition it helps in maintaining the prices high (Bernstein and Griffin,
2006). In perfectly competitive market, the firms when maximizing profits help in combining
with utility-maximizing. In monopoly situation, the various emotive help in balancing the
interest. In order to regulate the monopolies, government helps in protecting the interests of
consumers. It is necessary to consider the government regulations as monopolies are not able to
put the prices above the competitive equilibrium. In monopoly firms, it is necessary to consider
the quality of services. Regulations of government help in ensuring the firms to meet the
minimum standards of service. In Australia, government helps in promoting competition. In case
of natural monopolies, it is necessary for the high economies of scale and in order to regulate the
firm it helps in preventing the abuse of monopoly power (Salvatore, 2015).

Answer 4.
Environmental issues in Australia
There is number of environmental issues that affect the environment of Australia.
Conservation is the environmental issue in Australia which is of state and federal policy.
Australia provides a large portion of species and it is necessary to save the biodiversity for future
generations. It includes the preservation of biodiversity and it is necessary for government to
protect it from rainforests. The major cause of biodiversity in Australia is the land cleaning and
destruction of habitat. It is important for the conservation movement by the rainforests. In loss of
biodiversity, the various sectors like fisheries, forestry and agriculture resources. Waterway
health is a major concern in Australia. The protection of waterways will help in reducing habitat
and biodiversity. In Austalia, water use is the main sustainability issue. Climate change affects
the drought in Australia and puts pressure on water resources. Agricultural cleaning and
overgazing is an issue in Australia. It puts pressure on biodiversity. Government regulations are
essential for grazing and strategies for improving agricultural issues. Overgrazing helps in
promoting erosion and desertification and causes the spread of invasive plants in Australia
(Tranter, 2011). Pollution is the major environmental issue which Australians are facing and
intensive agriculture is affecting the oceans and coasts of Australia. Overgrazing occurs the soil
erosion which affects the poor farming practices and it also leads to desertification.
Environmental policies impact environmental issues which include the desertification Hazardous
waste policy is established for measuring and minimizing the toxic waste in the ground, water
and atmosphere of Australia (Hofmeyr and Cornish-Bowden, 2000).
In Australia, cleaning technology will impact on the foundation of cleaning and
renewable energy technology. Hydro energy, solar energy, and ocean energy are used for
cleaning the environment. Infrastructure development is an environmental issue because of the
continued growth in population on coastline. With the formation of metropolitan centers and the
increase in population in Australia a lead to displacing of the agricultural land which is of high
value and affects the biodiversity which is much valuable for the country. Overfishing and illegal
fishing are decreasing the fish stock in Australia. It is essential for the government of Austalia to
implement the regulation on illegal fishing by banning the same. It affects the major areas by

having low biological productivity. Deforestation is the environmental issue; the cut of forests
increases the salinity of soil. The areas with salinity affect the quality of water by saline water
draining and the areas are affected with the downsloping and down streaming (Rasiah, et al.,
2004).

Reference
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