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Tutorial 6 Questions

The document outlines the instructions and questions for Tutorial 6 of ECON 1101 for Semester 1 - 2026. It includes tasks related to market equilibrium for meat pies, electric vehicles, and apples, as well as a discussion on government subsidies for health improvement. Students are required to prepare handwritten solutions for the tutorial session.

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5 views2 pages

Tutorial 6 Questions

The document outlines the instructions and questions for Tutorial 6 of ECON 1101 for Semester 1 - 2026. It includes tasks related to market equilibrium for meat pies, electric vehicles, and apples, as well as a discussion on government subsidies for health improvement. Students are required to prepare handwritten solutions for the tutorial session.

Uploaded by

jastejsingh1902
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ECON 1101

Semester 1 - 2026

Tutorial 6

Instructions

Please prepare for the upcoming tutorial by attempting Questions 1, 2, and


3 before the session. Please bring the solutions handwritten on paper to your
tutorial. Your tutor will check your attempts at the beginning of session.

Questions
1. The market for meat pies is characterized by a downward sloping demand curve
and an upward sloping supply curve.

a) Draw the competitive market equilibrium. Label the price, quantity, con-
sumer surplus producer surplus. Is there any deadweight loss? Explain.
b) Suppose that the government introduces a tax on meat pies of $1 per
pie sold. Illustrate the effect of this tax on the pie market, being sure
to label the consumer surplus, producer surplus, government revenue and
deadweight loss if there is any.
c) Assuming there is no tax now, what is the effect on this market if the
supply curve shifts to the left due to a $1 per pie increase in production
costs? Is there a deadweight loss associated with this shift? Why/why
not?

1
2. Consider the market for electric vehicles (EVs). Suppose that escalating geopo-
litical tensions in the Middle East, including the closure of the Strait of Hormuz,
lead to widespread expectations of a sustained disruption to global oil supply
over the next two years.
Assuming the market for electric vehicles (EVs) is perfectly competitive, do
the following:

a) Perform a comparative statics of the short run impact of this report on


the EV market using a ‘typical firm’ and ‘market’ diagram.
b) Now extend the comparative statics to the long run and show and discuss
the final impact on the EV market using a ‘typical firm’ and ‘market’
diagram.

3. Consider a perfectly competitive apple market. Using a ‘typical firm’ and ‘mar-
ket’ diagram, show and explain the effect in the short run if the government
were to impose a per unit tax on apples.

4. [Time-permitting] The government wants to increase the overall health of


it’s citizens. It decides it can do this by either (a) subsidising cycling, or (b)
subsidising healthy eating. A one unit quantity change will result in equal
health improvements in both markets. Reports suggest that both demand and
supply for cycling is highly elastic, while both demand and supply for healthy
eating have low elasticity. To get the best the best bang-for-it’s-buck, should
the government subsidise cycling, or healthy foods?

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