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Faculty of Higher Education Assignment Cover Sheet Unit Code HC1072 Unit Name Economics and International Trade Assignment Number Economic Analysis of the Australian Market Is this a Group or...

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Faculty of Higher Education
Assignment Cover Sheet
Unit Code    HC1072
Unit Name    Economics and International Trade
Assignment Number    Economic Analysis of the Australian Market
Is this a Group or Individual assignment            Individual Assignment    If Group, please provide group number _________    
Due Date    09/10/20
Declaration
Complete this and attach as a front cover sheet to your Blackboard submission
We certify that:
This assignment is our own work. We have acknowledged and disclosed any assistance received in its preparation and cited all sources from which data, ideas, words (whether quoted directly or paraphrased) were taken.
This assignment was prepared specifically for this unit only.
The reference list is truthful and accurate and in Harvard referencing style.
Student name/s    Student number    [must be co
ect]    Which section(s) did each person work on
Bryan Ngunardi    ED2149     
        
        
        
        
        
This cover sheet must be attached to your assignment
Contents
The Event:    9
Impact on Australian Economy:    9
Fiscal Policy    10
Monetary Policy    11
Findings, Conclusions and Recommendations    12
References:    13
Appendix    14
Australia unveils $11.4 billion stimulus to cu
coronavirus impact    14
Despite only affecting about 120 people in Australia so far, economists are expecting the widening epidemic to cause a recession in the second quarter.    14
Demand and Supply
a) Determinants of market demand for goods and services during out
eak of corona virus are Income of the people, Price of goods and services, Preference of consumer.
Income of the people: Several people lost their jobs due to lockdown imposed by Australian government to control the spread of corona virus. This leads to lack of income among several individual. Decrease in income will cause decrease in demand for goods and services.
Price of goods and services: The event will cause price of necessary goods such as food, mask and medical equipment to increase due to mismatch between supply and demand in the market, whereas price for other goods and services such as car, clothing etc will fall due to lack of demand in these markets.
Preference of consumer: Consumer preference shifted towards food and medical equipments due to the out
eak of corona virus.
Consumer preferences shift towards personal protective equipment purchase even though there is a fall in real income and increase in price of the product. Therefore total demand for personal protective equipment increases during corona virus out
eak.
) Determinants of market supply for goods and services during out
eak of corona virus depends on the expectation of demand for their products, price of inputs, number of suppliers, government policies and regulations.
Expectation: Producers will increase their supply when they predict their demand for their product might increase in near future. They will decrease their supply when they predict their demand for their product might decrease in near future
Price of inputs: If input price decreases the producer will increase their supply and reduce their supply when input price increases.
Number of supplier: Increase in number of supplier will lead to increase in product supply whereas decrease in supplier leads to decrease market supply of output.
Government policies and regulations:
If the policies favour the production such as tax cut, providing subsidies will increase the supply of output whereas unfavourable policies and tight government regulations will lead to decrease in supply of output.
Medical equipment producers expected the demand for those product increases, price of labour inputs (wage) decreases as there are large number of people left unemployed due to lack of business activities in the economy. Supplier in this industry increases compared with the situation before the out
eak of corona virus. Government policies are favored towards the production of medical equipments. Therefore total market supply of medical equipment production increases.
c) There is an urge for personal protective equipment like protective mask, surgical gowns etc among people and government in order to take care COVID affected patients and to prevent other people from getting affected by this disease. Due to this situation supplier has more market power compared to consumer. Cu
ently demand for medical equipments is higher in the nation. Productions of these equipments are slow due to destruction in supply chain of raw materials. Therefore there is shortage in supply of medical equipment in the country.
d) A product is said to be inelastic demand when an increase in price does not affect the demand for product in greater manner. In order to protect people themselves from corona virus or to recover from COVID 19 they have to depend on personal protective equipment. So i
espective of price of this personal protective equipment people tend to buy them to protect themselves. Hence the price elasticity demand for personal protective equipment is said to be inelastic. In this situation consumer will bear an increase in price of personal protective equipment’s, because now this equipment is consider as a necessary good in the nation to protect people from COVID.
Industry Description and Market Structure Analysis:
a) Before the out
eak of corona virus Personal Protective Equipment manufacturers in Australia was less in number, because this industry faced competition from China manufacturing industry. Due to Pandemic out
eak increase in demand for PPE among people and supply from china got destructed. In order to avoid the shortage for PPE in the nation Federal government started to source and facilitate PPE, critical medical supplies and ventilators for the National medical stockpile. So Government requested to engage more number of firms in production of PPE. Cu
ently there are around 130 firms were engaged to produce PPE. Presently competition among Australia’s PPE manufacturing industry is increasing, because people depend on domestic supplier instead of international supplier at present due to fear of corona virus spread.
) PPE industry is perfect competition before corona virus spread, because Australia PPE market mostly depends on import from China. Trade increased the number of PPE supplying firm in Australia. Pandemic out
eak restricted the trade with China, which distu
ed the supply chain on the other end COVID 19 started to spread in the nation. This created excess demand along with shortage in supply of PPE. At this time existing domestic firms started to exploit the consumer by charging them at higher price. Cu
ently the market structure for PPE is oligopoly. Consumer will able to buy PPE at lesser price in perfect competition market compared to Oligopoly market. In oligopoly there is only few firms exist so firm is the price maker while in prefect competition firms are not price maker.
c) Australian Competition and Consumer Commission acted as a regulator for PPE industry .On 30th March 2020, Minister for health made a determination under the Bio security Act 2015, prohibiting price gouging on essential goods during COVID-19 pandemic. Custom regulation 1958 introduced new measures aimed at preventing exploitative exportation of essential good during the COVID 19 pandemic. These measures will ensure that people in Australia will not suffer from the issue of high price and shortage.
d) Independent Competition and Regulation Commission (ACT) they protect the ongoing interests of consumers and businesses operating in the Te
itory through our regulatory decisions and advice to the ACT Government. Australian Register of Therapeutic Goods (ARTG) involved in regulating the standard of PPE supply in the nation.
Externalities:
a) There is third party who is affected by spread of corona virus, because those who had traded with Australia lost their market in this nation temporarily. Out
eak of corona virus affected their supply chain, so their export got affected. During this time domestic producer will replace them in Australian PPE market.
) Corona virus impacted the third party in negative way and it impacted the domestic supplier in Australia in positive way. Third parties supply chain gets destructed due to fear of corona virus spread. For example Import restriction in Australia to avoid the spread of this diseases leads to temporarily stopping the trade with china affected Chinese who exported to Australia and resulting in losing their profits. At the mean time the supply gap is filled by domestic supplier, who will charge higher price compared to importing price of a product. This will impact domestic producer in positive way by increasing their profits.
c) Pandemic out
eak will lead to reduce foreign capital inflow and increase foreign capital outflow in Australia, which will affect the nation’s growth. Government should assure trading nations will be resumed after controlling the spread of corona virus.
Findings and conclusion:
Out
eak of corona virus affected international market in negative way and domestic market in positive way. This paved the way for gaining profit among domestic producer by reducing competition through restriction of trade with other countries to avoid the spread of corona virus. Domestic Firms producing Personal Protective Equipment faced oligopolistic competition, this created an advantage to increase their supply and sell their product at higher price with excess demand in the nation.
References:
1. Economic times Australia unveils $11.4 billion stimulus to cu
coronavirus impact https:
economictimes.indiatimes.com/markets/stocks/news/australia-unveils-11-4-billion-stimulus-to-cu
-coronavirus-impact/articleshow/ XXXXXXXXXXcms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
2. National Law Review COVID-19: (Australia) Government Bans Price Gouging, Exploitative Exports of Personal Protective Equipment https:
www.natlawreview.com/article/covid-19-australia-government-bans-price-gouging-exploitative-exports-personal.
3. ABC News Corona virus fires up production at Australia's only medical mask factory https:
www.abc.net.au/news/ XXXXXXXXXX/inside-australias-only-medical-mask-factory/ XXXXXXXXXX
4. Australian Government Department of Industry, Science, Energy and Resources National Measurement Institute helping industry respond to COVID-19 https:
www.industry.gov.au/news-media/covid-19-news/national-measurement-institute-helping-industry-respond-to-covid-19
The Event:
The entire world has been facing the effect of COVID 19 deadly virus which seems to have been leaked from china. World Health Organization (WHO) has declared this deadly as pandemic out
eak, because it claimed millions of people life all over the world. This disease affected the major nations like Italy, Spain and United States economy worse. Cu
ently no nation has discovered vaccines, that develops antibodies against the virus or no curable medicines has also developed. The only way to stay safe from the pandemic that has been recommended by WHO is social distancing. Social distancing calls for locking down and closing down of the entire economic activity. Closing down of the entire economy has led to the major downfall of the income’s world over.
Impact on Australian Economy:
GDP and Employment:
a) Out
eak of deadly diseases affected the Gross domestic product seasonally adjusted chain volume of Australia growth rate by 0.3% in March quarter 2020 compared to previous year of same quarter. Australia’s GDP growth rate was 1.4% from March 2019 to March 2020.Australia imposed lockdown after few case of corn virus reported, this affected the contribution of industry to the Australia GDP. Due to pandemic effect growth rate of GDP of the nation expected to fall by 10%.
Out
eak of deadly virus has negative impact on investment, consumption, net exports and government expenditure. This event leads to shutting down of various business activities; investment on business has also come down resulting in decrease in income of several people. This event also caused loss of jobs among several individuals and increased unemployment rate in the country, due to lack of business activities in the country. Decrease in income will lead to reduction in consumption expenditure, which in turn results in reduction of aggregate demand for goods and services in the economy.
This event is expected to cause a decrease in Aggregate demand for all goods and services in the economy and would shift the aggregate demand curve to the left. Production of output before pandemic effect with new aggregate demand would lead to
Answered Same Day Aug 05, 2021 HC1072

Solution

Nishtha answered on Aug 10 2021
144 Votes
ECONOMICS
Table of Contents
Introduction    3
Impact on Australian Economy    3
Government Fiscal Policy and Regulations    4
Monetary Policy    5
Industry Disruption and Market    5
Externalities    6
Findings and Conclusion    6
References    8
Introduction
Covid 19 is a communicable disease that caused by new corona virus. It first spotted in Wuhan, China. This sudden out
eak of the pandemic has created an alarming situation for whole world. This not only creates impact in the sector of public health and safety but also economic sector. The entire world including Australia faces this unpredictable crisis. This scene has never seen or experienced by anyone before, where almost whole world shut down.
Impact on Australian Economy
The economy of Australia had major natural disaster in 2019 that spawned to early 2020, just before super hit of the corona virus, Australia already took taste of Bush fires. If the covid 19 have not been occur, the bush fires of Australia would have been top natural disaster of 2020. Therefore, the Australian economy has going through two major disasters. The economy shrinks in the absolute terms. As mentioned by Peters (2020), the unemployment was on rise, there is a slowdown in almost every sector and decline in others. Manufacturing units shift internally; as a result, there is low labour cost.
There has been 60 % reduced demand of goods, services, 72% reduced cash flows, 24% decline access to the credits and 41% reduced ability to pay for operating expenses. There is a lack of business confidence and very high unemployment rate with the persistent presence of the life-threatening virus. The forced closure of the businesses increases the unemployment level in Australia. In the month of April 2020, it rose from 1 percent to 6 percent. Whereas, these number do not shows the additional workers, who have been working for few hours and stood down temporarily due to covid 19. Everyone’s expenses is someone’s income and vice versa.
When there is minimisation of the expenses and business pays to remain in business, it is natural that they will cut someone’s income. It is a complex set of a
angement due to which, the overall income level decrease. On the other hand, considering supply side, the labour side restricted because of the government social distancing norms and rules. However, there is perfect supply fulfilment of the essential items such as medicine and masks. Various fiscal policy and monetary policies also used to measure the market demand. However, it is difficult using traditional policies to address and respond to the supply shocks in the situation of pandemic as it is new to the entire world.
Government Fiscal Policy and Regulations
The fiscal policy of the Australia based on medium term framework that design to ensure the budget balance over the cycle. It also ensures that the government balance sheet remains in order. Australia has to treats its greatest recession period that has never occu
ed in past 30 years. The formulation of the fiscal plan allows to be used as a demand management tool. Wittwer (2020) has described that the Australian government introduced many stimulus packages for the sectors that affected by this pandemic situation the most. Australian people, who lost employment or have partial income, are access to the fiscal assistance of government. This program provides the entire requirement both on the personal and professional level.
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