After the 2019 Australia Bushfires, "A survey conducted in January 2020 found that 26% of Australian businesses had already been affected by the bushfires". Assume Mallacoota, a region of Australia devastated by the bushfires, produces food and manufactures cars.

Question 1 - Figures 1, 2, 3 represent the respective scenarios that the government of Australia can adopt to support communities to overcome the severity of the bushfires. Which of the figures represents the urgent resource allocation for Australia in March and April 2020 after the bushfires? Explain your answer.

Question 2 - Assume you are a manager of either a car mart or a food store. Use the factors that affect demand to explain the effects of the bushfires on your business.

ANSWER -

Question 3 - Assume due to the bushfire destruction of farmland, major cities in Australia experienced milk shortage. Also, assume the price of milk increased to AUD 1.75 from AUD 1.20 before the bushfires. Further, assume that due to the bushfire devastation the consumption for milk fell from 70,000 litres per day to 69,000 litres per day in Melbourne.

1. Use the midpoint formula to calculate the price elasticity of demand for milk in Melbourne. ANSWER -
2. Is milk a necessity in Melbourne? Explain your answer. ANSWER - 

Figure 1 Cars Cars 200 200 Figure 2 Cars Figure 3 40 70 food 20 400 Food 70 400 Food