1 The article also refers to the influence of animal rights activists.Explain what effect this might have on the demand curve for skins, and the effect on market price and quantity. Taking into account both the supply and demand issues referred to in the article, comment on the combined effect on both the market price and quantity.(3 marks)

Question 8 (ES)

Consider the following article on crocodile skins.

Crocodile farmers feeling the bite of a global oversupply of croc skins

By Matt Brann, Renee Cluff (ABC News, 12 February 2020)

Crocodile farmers across northern Australia say the industry is doing it tough, as a global oversupply of croc skins starts to bite.

...

Industry veteran John Lever, who started Queensland's first crocodile farm in 1981, said the profit margins on croc skins were getting very tight. "I've been working in the industry since 1972 and I never, ever thought it would come to this day where we would have over-production in the world market.Countries in Africa, there's been some huge investments and there are farms now with 100,000 crocodiles."

...

Professor Grahame Webb from Crocodylus Park near Darwin, said the oversupply of crocodile skins was a major concern for industry, but the issue was complex. "The price for premium grade skins with absolutely no blemishes at all is still high, ..." he said.

...

Professor Grahame Webb, who developed Crocodylus Park in 1994 as a crocodile research and education facility, said the crocodile industry was facing a number of issues. "..., you've got to look at it from the point of view of fashion companies that are under increasing attacks from animal rights activists who don't believe people should use any leather, wool or anything that comes off an animal," he said.

...

(Source:www.abc.net.au/news/rural/2020-02-12/oversupply-of-crocodile-skins-starting-to-bite-australian-farms/11935746)

The article states that there is an oversupply of crocodile skins. Explain what effect this would have on the supply curve for skins, and on the market price and quantity.(2 marks)

3 The elasticity of demand for public transport tickets would most likely be

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Answers

A.

Lower in the long run

B.

Higher in the long run

C.

The same in the short run and the long run

D.

Higher in the short run

4 Shoes and socks most likely have a

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Answers

A.

Positive cross elasticity of demand

B.

Negative cross elasticity of demand

C.

Negative income elasticity of demand

D.

Negative elasticity of supply

5 Which of the following is not an example of economic capital?

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Answers

A.

A Screwdriver

B.

A cement truck

C.

A share issue to finance business growth

D.

A warehouse storing inventories