Question 3

The government is currently considering setting a maximum price (price ceiling) for basic goods to ensure that people can get access to these goods at this current time. Fully explain your answer and also use a single diagram to demonstrate thelikely outcomes of this policy if the maximum price is set:

1. Below the current free market price

1. Above the current free market price

1. At the current free market price

(1.5 Marks per question) OR (1 mark per question if correct but no graph)

1. The Australian government has implemented a number of microeconomic reforms over the past 40 years including deregulation of banking. Do you think banking deregulation has been beneficial or not? Explain your answer. (0.5 marks per beneficial to maximum 1.5 and same for costs)Describe what you think may be the difficulties with microeconomic reform in Australia (0.5 per difficulty to maximum of 1.5 marks)and highlight an area that you think currently requires microeconomic reform. Justify your answer. (1 Mark).