## Revise the sets of notes included in Units 1 to 3 before attempting this question.

### economics

##### Description

Question 1

Revise the sets of notes included in Units 1 to 3 before attempting this question.

Consider a competitive market for land, in which supply is perfectly inelastic (the amount of land supplied is finite), and the demand curve has a standard shape.

Suppose the government needs X units of land for development purposes, and has two options to obtain the land required. The first option is to expropriate the land, i.e. take the land from the owners without compensating them. This will shift the supply curve to the left, as there will now be fewer units of land available in the market. The second option is for government to participate in the competitive market, shifting overall demand for land to the right while paying the resulting equilibrium price for the land it buys.

Draw a graph indicating the original market for land (i.e. with a standard demand curve, and a supply curve that illustrates a perfectly inelastic supply). Mark the equilibrium point as A.

Note: You can draw the graph using pen and paper, and scan it in or take a photograph to insert into this document. Alternatively, you can digitally create the graph directly in this document. Whichever method you decide to use, it is important that the graph is legible.

Using the same graph drawn to answer Question 1.1, indicate what would happen if the government expropriates the land. Show this by illustrating the shift in the supply curve. Mark the new equilibrium point as B.

Using the same graph drawn to answer Questions 1.1 and 1.2, indicate what would happen if government participated in the market and increased demand. Show this by illustrating the shift in the demand curve. Mark this new equilibrium point as C.

Insert your graph for Questions 1.1, 1.2, and 1.3 here:

Consider how each of the two options provided might impact the price of land. Which option do you think private consumers (i.e. people who are currently in the market to buy land) would prefer, or do you think they would dislike both options? Justify your answer. Your answer should be 40 to 50 words in length.

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Which of the two options do you think private suppliers (i.e. people who are currently in the market to sell land) would prefer? Justify your answer. Your answer should be 20 to 30 words in length.

Start writing here:

Question 2

Revise the set of notes included in Unit 1 before attempting this question.

To make informed business decisions as a manager, you should be familiar with the characteristics of the demand curve for your product. However, a demand curve is not something you can simply look up online.

Suggest and explain two ways in which a manager can identify the characteristics of the demand curve for a product their company produces.

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Question 3

Revise the set of notes included in Units 1 to 3 before attempting this question.

The government wishes to support the income of existing dairy farmers. It plans to do so through the increase of demand, by legislating that every state school should provide a glass of milk to every student during morning and afternoon classes. Assume that the dairy farming industry has very low barriers to entry, i.e. it is very easy for new entrepreneurs to acquire cows and increase the supply of milk.

Draw a graph indicating the original market for milk (i.e. with a standard demand curve, and a supply curve indicating that supply is very elastic). Mark the equilibrium point as A.

Note: You can draw the graph using pen and paper, and scan it in or take a photograph to insert into this document. Alternatively, you can digitally create the graph directly in this document. Whichever method you decide to use, it is important that the graph is legible.

Using the graph drawn to answer Question 3.1, indicate the change that will occur due to the government’s intervention in the market. Show this by illustrating the shift in the demand curve. Mark the new equilibrium point as B.

Insert your graph for Questions 3.1 and 3.2 here:

Does the price of milk increase significantly after the government intervention? Why is that the case? Your answer should be between 30 and 40 words in length.

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In this instance, is government intervention successful in achieving the goal of supporting the income of existing dairy farmers? Justify your answer. Your answer should be between 50 and 60 words in length.