Econ Practice Questions - Assignment Example

Question 1 Labour is essential in every field and so more in lamb production. Increase in the wages for labour from the mining sector would mean that the cost of production increases as to retain workers producers in the lamb manufacturing business would have to pay similar or higher wages. This would mean that the margins of the lamb producers will be impacted. In the short run it is not possible to make changes in the cost structure and would thereby result in reduced margins and increased cost (Bhaskar, 2007) as shown below The above graph shows that the supply of labour has decreased despite the demand being the same. This has resulted in the equilibrium supply of labour to decrease from Eq1 to Eq2 whereas the equilibrium price which is charged has increased from Ep1 to Ep2 highlighting the lower supply at higher prices for labour. This will result in the producers to pay more thereby having an impact on their margins and reducing the overall profits and margins for them. This when denoted through the marketing margin behaviour will look as It is clearly evident from the above chart using the marketing margin behaviour that the change of incidence would be greater for the retail price. The above graph clearly highlights that the change of incidence is greater for the retail price as the change in price would be passed on the retailers which will result in higher cost for them as well and reduced margins. This will thereby result in having a higher incidence cost and will directly relate to the manner in which the business is able to lose due to change in factors of production (Cottle & Wallace, 2005). Question 2 Australian Egg Corporation Ltd (AECL) has looked towards reducing the supply of eggs while ensuring a same or rise in demand to ensure that the producers of egg continue in the same profession and are able to make profits because of the fact that the supply is more than the demand. The strategy adopted by Australian Egg Corporation Ltd (AECL) is as shown below Reducing the supply would mean that the price of egg would go up as the demand remains the same so to match demand and supply the price have to move up. This will ensure that the producers don’t incur loss and are able to make profits from it. The decrease in supply and rise would price would also mean that the demand for eggs would fall by a certain degree. This would pull the prices down but the impact of it is largely dependent on the manner in which demand changes due to change in supply. The overall change which will be witnessed is that the prices of eggs would go up which would help the producers to sustain their business but would also mean a slight reduction in the demand. This is further shown below The impact of such a decision would largely depend on the demand of eggs after the rise in price. On the whole the strategy which has been implemented should actually result in a rise in price for eggs with a slight drop in the demand for eggs which would further neutralize over a longer period of time as increased profits would make more and more people to start producing eggs. Question 3 Introduction This paper looks at evaluating the manner in which agriculture sector is witnessing a downfall for the Australian economy and the required support which will be needed in order to help the agriculture sector to grow. The report will thereby look at evaluating the article titled “The Future Productivity and Competitiveness: Challenge for Australian Agriculture” by John Mullen and Mick Keogh. The paper will provide a brief summary and provide a critical appraisal of the article with regard to the key issues, results, implications, findings, future direction and scope. The report will thereby help to identify the dimensions through which the Australian agriculture sector can be supported and better growth rates can be ensured Research Question The research question which has been identified is the article is “to identify the key drivers of productivity with a view to suggesting the rate of productivity growth that is likely to be required to maintain the competitiveness of Australian agriculture both within the Australian economy and relative to the agricultural sectors of other economies”. This will help to understand the different dimensions which needs to be worked and will also help to use the learning in practice. The topic is of particular interest as it inclines to my field of study and will help to apply the different concepts and learning’s to the real world scenario. This will thereby help to develop better dimensions for the future and provide an opportunity to act in a particular manner. Key Points & Main Issues Identified The different key issues and points which have been identified from the article are The article highlighted that the agriculture sector of Australia is witnessing a downfall and the contribution towards GDP is falling steadily. This will make difficult for the Australian economy to ensure self sufficiency and will have to increase their reliance on import of food grains The article highlighted that the prime reason for decrease in the growth rate for the last two decades has been entirely due to stagnation in public investment especially in research and development after the 1970s. This has resulted in little changes in the strategies which were procured for the agricultural sector and would require widespread ramifications to ensure better growth To ensure that the agriculture sector move from the present depleting growth rate of 1 percent to 2 percent investment will be required in the agriculture sector and the amount of investment which will be required is around 5 percent of the GDP. This would mean strong contribution from the sector and would thereby require change in strategies towards the agricultural sector. Australian economy needs to consider the agriculture sector as one strong component which can help towards the growth of the nation and need to thereby develop strategies which will be aimed towards bringing a change in the behaviour so that people start to invest in the sector. This will be aimed towards ensuring that the Australian economy becomes self sufficient and is able to meet most of the agricultural needs by themselves. The article also intuitively brings forward the fact that the Australian economy needs to adopt stringent measures which will be aimed towards reviving the agriculture sector of Australia as without appropriate strategies and measures the Australian economy will find it difficult to bring the required transformation in economic growth. Result of the Study The study conducted out shows that agriculture sector which was one of the contributor towards the GDP of Australia is witnessing a decline in growth rate. This is a concern for the Australian economy and to ensure that the Australian economy is able to grow will need investment to be made in the agriculture sector. To revive the agriculture sector and move from the present depleting growth rate of 1 percent to 2 percent investment will be required in the agriculture sector and the amount of investment which will be required is around 5 percent of the GDP. This requires that policies and strategies are crafted and the government starts to look towards this direction as one of the important indicators and bring about increased investment. It is also evident that over a longer period of time the Australian economy will start to feel the heat as depleting rate of growth in the agriculture sector would slowly impact other sectors and could lead towards increase in prices. This would thereby result in wiping out the gains which was established due to growth in the other sector as it would lead towards inflation and will thereby impact the growth rates. The study also denotes an important aspect of the Australian economy and highlights the manner in which manufacturing and other sectors are overtaking the agricultural sector. To be able to ensure similar growth and better prosperity through growth in the GDP it is essential that the agricultural sector is given appropriate response. This will help to develop the require parameters and will help to work on aspects through which imports reduces and the economy is able to increase their percentage share of foreign exchange. Arguments Convincing The arguments provided in the article are convincing as it helps to highlight on the fact that the agriculture sector which was one of the strongest contributor in the growth of the GDP but is slowly witnessing a decrease in growth rate. Changes in the policies towards the agriculture sector would mean that the economy will be better placed as it provide an opportunity to ensure similar or even better growth rates as the agriculture sector which is a huge sector will contribute towards the growth of the economy. In addition to it the agriculture sector of Australia is witnessing a downfall and the contribution towards GDP is falling steadily. This will make difficult for the Australian economy to ensure self sufficiency and will have to increase their reliance on import of food grains. Changes in the policies and strategies would help to ensure that the agriculture sector is able to contribute and will thereby be able to provide better level on income and growth rate. Further, the Australian economy was witnessing stronger and better growth rates when the agricultural sector was contributing. If the agricultural sector along with the other sectors like manufacturing and service starts to contribute towards the GDP it will result in bringing a complete change in the manner business decisions are taken. This will also provide an opportunity where the economy will be able to witness better growth rates and will be able to bring the required change a transformation in the manner economy performs. An important facet to note here is that growing agriculture and use of new technology and better methods would mean a complete overhaul and change in the manner business works and will thereby get reflected in the growth rate of the economy. Implications The results clearly bring forward that the Australian economy needs to undergo the required changes and needs to consider the agriculture sector as one strong component which can help towards the growth of the nation and need to thereby develop strategies which will be aimed towards bringing a change in the behaviour so that people start to invest in the sector. This will require adopting strategies where the agriculture sector move from the present depleting growth rate of 1 percent to 2 percent investment will be required in the agriculture sector and the amount of investment which will be required is around 5 percent of the GDP. This would mean strong contribution from the sector and would thereby require change in strategies towards the agricultural sector. This will help to revive the depleting sector and will bring about a complete change in the manner the sector works and will ensure better growth in the future. In addition to it reviving the agriculture sector would result in less dependency on the outside world for agriculture and will provide an opportunity through which better growth rates can be depicted over longer period of time. This will also help to ensure that the agriculture sector will witness the use of new and improved ways and technology which will improve production and will bring about a complete change in the manner economic decisions are taken. This would thereby get reflected positively on the performance and help to increase the chances of future growth through better growth rates and increase in the disposable income of people. Conclusion The Australian economy needs to look towards increased investment in the agriculture sector as it will help to revive the sector and will bring about a change in the manner the sector is performing. Australian economy needs to consider the agriculture sector as one strong component which can help towards the growth of the nation and need to thereby develop strategies which will be aimed towards bringing a change in the behaviour so that people start to invest in the sector. This will help to ensure better growth rates and will bring the change through which the Australian economy will be able to grow and will be better positioned. References Bhaskar, V. 2007. The competitive effect of price floor. The Journal of Industrial Economics, 25 (3), 329-341 Cottle, R. & Wallace, M. 2005. The effectiveness of supposedly ineffective price constraints. Journal of Business & Economics, 10 (4), 71-76 Mullen, J. and Keogh, M. 2013. The Future Productivity and Competitiveness: Challenge for Australian Agriculture. Australian Farm Institute Read More