ECON 1012 University of Adela

Course Learning Outcomes: 1, 3& 4Topic/s of Primary Focus: Government Intervention -The Cost of Interfering with Market Forces(May also include content from previous topics.)Read the following excerpts from the Carsguide webpage ‘Luxury car tax Australia: What is the LCT?’(2 March2021)https://www.carsguide.com.au/car-advice/luxury-car-tax-australia-what-is-the-lct-82593What is luxury car tax? Luxury Car Tax (LCT) is a tariff on new cars (those less than two years old) sold at a price that’s above a value threshold set by the Australian Tax Office (ATO), and it’s called aLuxury tax because theoretically it only applies to expensive cars at the luxurious end of the market. The tax is paid by dealers who import or sell luxury cars and also by individuals who import luxury cars, with dealers generally passing on the cost of the tax to the buyer as part of a vehicle’s total price. Introduced by the Federal Government on 1 July 2001, the LCT was implemented as a means to dissuade and limit Australians from buying imported prestige and exotic cars, encouraging them instead to purchase Australian-built cars from Holden, Ford and Toyota (back when such cars existed). With Holden, the last domestic car manufacturer, closing in 2017, luxury car tax in Australia has become a hot topic of debate with a growing wave of support from industry peak bodies such as the Federal Chamber of Automotive Industries (FCAI), the Australian Automotive Association (AAA) and the Australian Automotive Dealer Association (AADA) to abolish the tax for being a redundant and unnecessary form of government charges. When does luxury car tax apply? LCT is charged at the rate of 33 percent on the amount above the LCT threshold, which for the 2020-2021 financial year was $77,565 for fuel-efficient vehicles (classified as cars that have a combined fuel-consumption rating not exceeding 7 litres per 100 kilometres) and $68,740 for other vehicles.So, for example, if your car cost $100,000 and used 10 litres per 100km, you would pay the 33 percent tax on $31,260, meaning it would take the price of the vehicleto $110,0315.80.The rate was increased to 33 percent from 25 percent back in 2008, despite no Senate approval for the sizeable increase.

2[…]While the death of local car manufacturers is key in the argument against luxury car tax in Australia, there’s also the question as to why such a tax doesn’t apply to other luxury vehicles such as boats, helicopters and private jets. And although there have been hopes that the Australian Government would cut luxury car tax on EVs to encourage consumers to buy them, this has yet to occur.[…]Task:Utilise a tax within ademand and supply model for luxury cars, to analyse the Luxury Car Tax described on this webpage. Although in reality it is a percentage-based tax with even other complexities such as a threshold, as a simplification you can consider it as a basic per-unit tax of a fixed amount (and do not need to follow the correct numbers), to make itmore similar to examples studies in our course.The article says that the “tax is paid by dealers”. Explain why then it is not just the dealers (sellers) who are impacted by the tax. Detail the impacts caused by this tax on not just the dealers, but alsoon consumers, the government, and overall economic efficiency.Ensure that you use diagrams where relevant to support your answer, and make sure to use key terminology and course concepts where appropriate.Format:The format of your response should bean essay-style response.You do not need subheadings or subsections.You do not need to spend as much attention on formal essay structure as you might for a persuasive or research-based essay. Instead you should focus on communicating your ideas in a clear and concise manner and making sure there is a logical flow of ideas and explanation.Word Limit:800 words (excluding diagrams and references)Diagrams:As stated in the task, you should include diagrams where relevant. Where you use diagrams, they should be created by you. You could either draw them by hand and scan/photo them into your document. Or prepare them electronically. However,they must be your own work. You should not paste in diagrams from the internet or the textbook, even with referencing, as this will not adequately show the grader your understanding of these diagramsand models.

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ECON 1012 University of Adela

ourse Learning Outcomes: 2 & 3Topic/s of Primary Focus: Macroeconomic FundamentalsAggregate Supply and Aggregate DemandMoney and Inflation(May also include content from previous topics.)For this assignment, you will refer to the ReserveBank of AustraliasOctober Monetary Policy Decision media release, available at the below link:https://www.rba.gov.au/mediareleases/2021/mr2122.htmlThe minutes of that meeting may also be of use: https://www.rba.gov.au/monetarypolicy/rbaboardminutes/2021/Task:For this assignment, you are asked to provide your own analysis of RBAs October Monetary Policy decision. This must be in your own words, and reflectyou own understanding and application of course content.As part of this analysis, ensure that you include and focus on the following:The reasons for the RBAs decision, including reference to various economic variables and what they indicate about the state of the economy andwhat policies might be appropriate.What the policy position, particularly the main position around the cash rate target,means in terms of the RBAs implementation, and how that is transmitted to impact economic activity.Makesure to use key terminology and course concepts where appropriate.Format:The format of your response should be an essaystyle response.You do not need to spend as much attention on formal essay structure as you might for a persuasive or researchbased essay. Instead you should focus on communicating your ideas in a clear and concise manner and making sure there is a logical flow of ideas and explanation.Word Limit:800 words (excluding diagrams and references)

2 Diagrams:Whereyou use diagramsof course models, it is best if they arecreated by you. You could either draw them by hand and scan/photo them into your document. Or prepare them electronically. However,they shouldbe your own workto better reflect your understanding.If you wish to include diagrams or tables of datafrom other sources, you can also do that with clear and appropriate referencing.Referencing:This is not a research assignment. So you do not necessarily need to find other references. You should answer the question based on what you have learnt in the course and the linked RBA page/s.However, it is important that if you do take content directly from other sourcesincluding course materials, both quoting andparaphrasing, that you appropriately reference to show what is your own original thoughts and what ideasyou have borrowedfrom others.Please refer to the Academic Integrity Module within the course for further guidance and links regarding referencing, plagiarism, and academic integrity.Where referencing is used, itcan be in any standard style, so long as it is consistent. The Harvard referencing style is preferred, as it is the standard in Economics and is also common in Business disciplines.https://www.adelaide.edu.au/writingcentre/resource…guidesAll submissions will be analysed with the assistance of Turnitin, checking for plagiarism against other students in the class and external sources

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ECON 1012 University of Adela

Topic/s of Primary Focus: Supply in Perfectly Competitive Markets

Read the following excerpt from ABC News article ‘Dairy farmers exiting the industry across NSW due to low milk prices’ (30 June 2018) https://www.abc.net.au/news/rural/2018-06-30/dairy…

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Farmers across New South Wales are actively making plans to exit the dairy industry.

For many farmers, the last straw came as they received confirmation from processors this week that they could be facing another year producing milk below the cost of production.

“It’s quite disgusting actually, after the positive reports and Bega Cheese talking up a strong market at the moment,” said dairy farmer Michael Shipton.

Drought, rising input costs and fatigue are just some of the factors farmers say are undermining the viability of farms in traditional dairy regions.

The farm gate milk price was below expectations for many suppliers.

Bega Cheese announced the 2018–19 opening milk price of $6.70 per kilogram of milk solids or 50 cents per litre for NSW producers — a 3 per cent increase on last year.

The ABC spoke to half a dozen Bega Cheese suppliers who all shared their dissatisfaction with the dairy processor describing the price as “very disappointing”.

Mr Shipton, who operates just outside of Bega, said he would have to reduce the number of cows and staff over the coming months.

“For 20 cents a kilogram increase on last year, it’s just not enough for farmers in the valley to cover the costs,” he said.

“Input costs are up — grain prices, fuel, electricity, and on top of that wages go up on the first of July.”

Task:

Explain why some farmers producing milk would be exiting the market in the circumstances described above in June 2018. And why even though it is suggested that they were ‘producing milk below the cost of production’ in the previous year, that they had not already shut down in the short run.

Ensure in your answer that you use concepts such as shut down, exit, short and long run, profit, variable and fixed costs, and cost curves – and that you use diagrams to support your explanations where relevant.

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