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As announced in the 2021-2022 National Budget, the Fijian Government is supporting formal and informal sector employees on Viti Levu who are affected by the pandemic through monthly payments of $120 for a period of six months (August 2021 – January 2022). The Fiji Sun dated 23rd August, 2021 reports “Attorney-General and Minister for Economy yesterday tweeted that: “Days ahead of schedule, we have met the once-in-a-century COVID-19 crisis with one of the largest assistance payouts in history. $72m was paid in unemployment benefits to 200,000 Fijians. In the coming days, we’ll reach 60,000 more bringing the total payout to around $94m.”
As an economist you are trying to assess this COVID-19 benefit scheme. In the essay critically evaluate the above COVID-19 Unemployment Assistance from the Fijian Government. Follow the rubric below – have an introduction, body and conclusion.
Max has the utility function U(x, y) = xy + x. The price of x is $2 and the price of y is $1. Max’s Income is $11. How much x does Max demand? How much y?
If his income doubles and prices stay unchanged, will Max’s demand for both goods double?
Professor Five likes wine. He is especially fond of Red Wine. His wine budget is $200 per month. He is considering a purchase of three different types of Red Wine. The first, bottled by the UltraBoutique Winery has a price of $50 per bottle. The second, produced by the Good Enough Winery is priced at $20 per bottle. The third, produced by the High Volume winery, carries a price of $5 per bottle. While Prof. Five believes the UltraBoutique wine is noticeably better than either of the other two, he is unsure whether UltraBoutique is ($50/$20)=2.5 times as good as Enough. Similarly, he is unsure whether Good Enough is worth ($20/$5)=4.0 times as much as High Volume.
Question: Discuss Prof. Five’s budget constraint for these three wines.
Suppose the average income of a consumer decrease from R18 000 to R12 000. As a result, the quantity of product A demanded by the consumer increases from 200 units to 280 units. Use the ARC formula to calculate and classify the income the elasticity of demand for product A.
If dairy farming is subsidised,we would expect the value of a litre of milk to be
Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per year—and would thus face a tax increase of about $500 per year from the cigarette tax at the person’s current level of consumption. The income tax measure would increase the person’s after-tax income by $500.
Would the combined measures be likely to have any effect on the person’s consumption of cigarettes? Why or why not?
Explain one determinant of demand and discuss how it can affect the demand curve by giving an example.
