1. The Government is concerned with eating habits and obesity in Australia. They are looking to increase the price of unhealthy foods (through taxes) and decrease the price of healthy foods (through subsidies) to encourage consumption of the 'right' types offOOd. Similar work is being done in the US and UK. Below is a table showing information that Harding and Lovenheim (2013) did for the US. Table 1. Price elasticities of demand for different types of food CATEGORY TYPE CALORIES PRICE TYPICAL PRICE P E R P E R 1 0 0 SPENDING ELASTICITY SERVING G ($) P E R 0 F WEEK ($] DEMAND 1 Fruit and 660 0.38 2 1.128 vegetables 2 Fruit and 140 0.36 3.44 0 .8 3 vegetables 1 5 Grain , pasta , 1,540 0.38 2.96 0.854 bread 1 '7 Grain , pasta , 960 0.53 2.64 0.292 bread 2 8 Snacks , candy 433 1.13 4.88 0.2 7 2 9 Snacks , candy 1,727 0.68 7 .6 0.295 3 0 Milk 2,052 0.09 2.32 1.1793 3 1 Milk 874 0.15 1.44 1.972 Matthew Harding and Michael Lovenheim. 2013. 'The Effect of Prices on Nutrition: Comparing the impact of Product- and Nutrient-Specific Taxes'. SiEPR Discussion Paper No. 13-023 I Using this information - prepare a brief for the PM detailing which goods would you tax (increase the price), and which goods would you subsidise (decrease the price) and why. 2. Read the article on road pricing from the Economist. Using your knowledge ofdemand and elasticity, write a 1 page memo for the Minister of Transport explaining the differences in pricing between peak times and off-peak times. Your discussion should include both graphs and dot-point explanations. [Note: there is no need to include a supply curve]