# HI5003 Tutorial Submission Q…

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HI5003 Tutorial Submission Q… •••
Assessment Question Week 2 and 3 Demand and Suooly, and Elasticity
Question 1
7 Marks
Due to inflation in Australia in December 2019, the price for petrol increased from AUD 1.35 to AUD 1.45. This caused petrol consumption to decrease from 2500 litres to 2450 litres at a 7-Eleven Petrol Station in Sydney.
Also, when the price for Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle) increased from AUD 950.00 to AUD 990.00; demand for these air conditioners fell from 2500 units to 2000 units.
Following this condition, answer the questions below.
i. Using the mid-point formula calculate the price elasticity of demand for petrol and Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle). (2 Marks)
ii. Is the price elasticity of demand: elastic, unit elastic or inelastic for each commodity (petrol and Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle)? (2 Marks)
iii. Suppose the government decides to increase tax for petrol and Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle). Use two diagrams to explain the incidence of the tax increase for each commodity. (3 Marks)
Assessment Question Week 4: Production costs
Question 2 7 MARKS
James was a high school teacher earning a net salary of \$4500 per month. After working for one year, he quit his job to start his own kiosk business dealing in various consumer goods. In order to learn how to run the business, James enrolled in a TAFE to acquire accounting skills. James’ course was for 6 months. James had to pay \$3,000 as tuition for the 3 months.
After the training, James borrowed \$40,000.00 from his uncle whom he pays 8 percent interest per year.
Also, James withdrew \$ 50,000 from his savings account. He had been earning 5 percent interest per year for this account. Further, to start the business James used his own premises given to him by his father.
His father had been receiving \$11,000 from rent per year. Finally, to start the business James uses \$75,000 he had been given by his father to go on holiday to USA.
James’s first year of business can be summarised as follows:
3 H15003 Economics for Business -2020 T3 Tutorial Submission Assessment