Question 1: Melbourne is well-known to be a dynamic city with numerous cafes. Since you enrolled in BUS5POE, there has been a lockdown in Melbourne and Victoria. Assume that cafes are in perfect competition in Melbourne and the initial market price of a take-out coffee is 5 dollars. Assume that cafes are authorized to open if they want during the lockdown:

a.The supply curve of take-out coffees

b.The demand curve of take-out coffees

c.The equilibrium in the market for take-out coffees

Question 2: Assume that restaurants are in monopolistic competition in Melbourne. Looking at the cost incurred by firms operating in a monopolistic market, what is the impact of a curfew on the profit/losses made by Melbourne restaurants in the short run? What could happen in the long run? Provide a graphical representation of the equilibrium of the firm in the short run and in the long run.

Question 3: In some industries, the Unions and workers agreed to cut wage to preserve jobs. Explain the economic rationale of a wage cut of 10%. With a graphical representation of the equilibrium of the labor market, show how a reduction in the wage can preserve jobs.