QUESTION 1

1. Tim, after completing Year 12, was not sure whether to take a gap year, to attend university or work full time. In the end, he decided to go to University. Define and explain the opportunity cost of Tim's decision to go to University.1.5 Marks
2. Assume the amount of beer consumed in the pubs of Melbourne and the amount of rice eaten in the Melbourne restaurants have both been increasing over the last 20 years. Draw a graph showing their relationship. Use these two events to highlight the difference between the concepts of correlation and causation. 2 Mark
3. The government has receive the following advice from economists, "Reducing youth unemployment should be a major priority of any government. Providing a youth wage subsidy of 25 percent will reduce youth unemployment by 4 percent." Identify and explain the two types of economic statements in the advice provided to the government.1 Mark
4. What are the three fundamental economic question of production? Explain why.2 Mark

QUESTION 2

Mike, whilst walking along Collins Street came across a shop selling the "JOYRIDE" technology-based NIKE running shoes considered superior by the world's best athletics. Although Mike already owns four pairs of NIKE runners, he decided to buy the new runners. Feeling please with himself Mike went to the Pub for a beer. It was "Happy hour" at the Pub, the beers were 30 percent cheaper, and Mike drank three beers rather than his usual two beers. Using demand and supply graphs illustrate and explain the concepts:

1. Identify the paragraph that represents a "Change in quantity demanded". Graphically illustrate and explain the concept. 1.5 Marks
2. Identify the paragraph that represents "Change in demand". Graphically illustrate and explain the concept. 1.5 Marks
3. Reflect on an occasion where each of the concepts applied to you. 1 Mark

QUESTION 3

1. Ceteris paribus. Assume the price of pears, a substitute for apples, has increased by 50 percent. Use demand and supply analysis to graphically represent and explain the impact on price and quantity in the apple market.1.5 Marks.
2. The Asian Financial crisis, which started in July 1997, rapidly decreased the income of the people of Thailand. The fall in income caused an increase in the demand for instant noodles but a decrease in the demand for fresh meat. In economics, what type of good is "instant noodles" and "fresh meat"? Explain. 1.5 Marks

QUESTION 4

Ceteris paribus, use demand and supply analysis and graph(s); explain why the price of watermelon decreases in summer even though the demand for watermelon increases.1.5 Marks

QUESTION 5

Ceteris Paribus, assume at the same time as the demand for e-scooters were increasing the federal government imposed a tax on e-scooter suppliers. Use demand and supply analysis to graphically represent and explain the impact on price and quantity in the market for e-scooters. (HINT: there is more than one possibility to the changes in price and quantity). 3 Marks

QUESTION 6

1. Ceteris paribus, assume the police have reduced the amount of heroin in the market with the arrest of major heroin dealers. Use demand and supply graph(s) and the concept of the price elasticity of demand; explain the impact on the price, quantity, and total revenue in the market for heroin if the:
2. The demand curve for heroin is elastic 1.5 Marks
3. The demand curve for heroin is inelastic. 1.5 Marks
4. If you owned a business, explain how you will apply the concept of price elasticity of demand when setting price.1 Mark

QUESTION 7

1. The cost of rental housing in Australia is at an all-time high, having increased by 4 percent in the year to March 2021. Use demand and supply diagram(s) to illustrate and explain the impact on the market for rental housing if the government legislated rental prices to protect low-income household.2 Marks
2. Name two public goods that you have used. Explain why they are public goods. 1 Mark