Assessment 1- Report: Microeconomics – ECON6000 Word limit: 2500 words Week due: End of Week 6 (16th Oct 2020) Weighting: 40% Business report guidelines  Covering page – ensure you include your name,...

MICRO ECONOMICS ECON6000
BUSINESS REPORT
1. EXECUTIVE SUMMARY
The report intends to create a conceptual knowledge of the important terms in microeconomics that is demand and supply. An observation on the movement of demand and supply based on the changes in the factors that influence this are discussed in the report. Various sources both academic and external websites and blogs are used for various comparisons and explanations throughout the project. The project concludes by finding the change that had happened to demand side and supply side of a country after the introduction of measures by the government to reduce the effects of Covid-19.
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY
2. IMPACT OF FEDERAL GOVERNMENTS JOBKEEPER PAYMENTS
3. PURCHASING POWER
4. CHANGE IN PRICE AND INCOME ELASTICITY
5. SUPPLY AND DEMAND DIAGRAMS
6. CHANGE IN DEMAND AND SUPPLY
7. STRATEGIES TO BE ADOPTED BY GOV. TO GROW INDUSTRIES
8. CONSUMER AND PRODUCER WELFARE
9. EXPLANATION USING DIAGRAMS
10. CONCLUSION
11. REFERENCES
2. IMPACT OF FEDERAL GOVERNMENTS JOBKEEPER PAYMENTS
In the year 2020, the world was hit badly was a pandemic and all the industries and sectors were affected very badly. Many business collapsed, many has come to the verge of liquidation and many working in huge loses or with minimal profit for survival. As a result of this changing profit condition many entities cut down their activities and many lost their jobs. Unemployment and poverty found an increased space in the world and the governments are now compelled to take targeted actions to reduce this situation and make everything under control.
As a part of this agenda the Federal Government introduced Job keeper payments to tackle the rising unemployment. Under this program the government provided subsidies to the business which was significantly impacted by Corona virus. This has allowed the employers to continue the payment of wages even if the workers are not able to work (Australian government March 2020).
When the employers stopped paying the wages to workers who were not able to work the unemployment started sprouting in the country. When the flow of income was stopped there was a significant decrease in the disposable income with the individuals. Disposable income also termed as personal disposable income is the amount of money available to the individuals for meeting their expenses and saving after accounting taxes on income (Will Kenton 2020 July). Disposable income can be considered as a measure of purchasing power of the individuals. When the disposable income increases people would be spending more and as a result the demand for the products increases. When the demand increases and supply remains the same it leads to a situation of inflation in the country. In order to tackle the situation the business would try to increase the supply and now the supply and demand meet at equili
ium and the situation would be under control.
3. PURCHASING POWER
The introduction of job keeper payments by the Federal government has led to a significant increase in the purchasing power of its people. Purchasing power can be explained as the quantity of goods and services that can be bought using one unit of money (Adam Hayes April 2020). The important factor that affects the purchasing power of a person when everything remains constant in inflation. When a country starts experiencing inflation the prices of goods and services increases, this means that earlier if a unit of money could buy 10x goods now the same quantity of goods could bought only by paying double the amount. Another situation that could lead to the reduction in purchasing power is unemployment. When unemployment prevails in the country then the people’s disposable income in hand decreases. When income decreases people would cut short their expenses and the demand for the goods decreases. When demand decreases and supply remains the same then there would be excess of goods in the market and would lead to decrease in the price and lead to deflation. This is opposite to the condition caused by inflation. Then the manufacturers have to cut short their production and this would lead to decrease in job opportunities and unemployment. Since this condition prevails the income in hand will decrease and the demand and supply would gradually meet in equili
ium.
In present scenario the country was having a shortage in its disposable income and the demand for goods was low. By the introduction of job keeper payments the income of people increased and the purchasing power also increased. When more goods are purchased then to meet the demand the manufacturers would start producing more goods. When production starts the employment opportunities increases and again the...