Assignment Overview:
Assignment Overview:
This assignment is partly based on the attached article, âAustralian
Housing Market Report,â Prepared for National Australia Bank
Ltd. by RP Data (November 2014). Please read this article
carefully before attempting the questions. You will be required to
demonstrate your understanding of economic concepts taught in
the unit and relate them to the cases in the article.
Question 1:
In your own words, summarize the article, âAustralian Housing
Market Report,â Prepared for National Australia Bank Ltd, by RP
Data (November 2014). In particular, what are the main messages
of the article?
Question 2:
Using appropriate diagrams, figures and data to answer: Are the
Melbourneâs housing prices overheated? Why or why not?
Question 3:
Suppose that the Melbourneâs housing market is perfectly
competitive (i.e., many real estate developers). The city
government decides to levy a buyerâs tax (specific tax) on housing
purchases.
Using appropriate diagrams to answer:
(a) Examine the impacts of this buyerâs tax on the equilibrium
housing prices, consumer surplus, producer surplus, and total
surplus (or social welfare).
(b) Can an increase in the buyerâs tax raise social welfare?
(c) Can an increase in the buyerâs tax raise city governmentâs tax
revenue?
Question 4:
Suppose that city government decides to develop a new housing
area (i.e., the city government is like a monopolist).
Using appropriate diagrams to answer:
(a) If the city governmentâs objective is to maximize profits, what
would be the housing price set in this new area?
(b) If the city governmentâs objective is to maximize revenue, what
would be the housing price set in this new area?
(c) If the city governmentâs objective is to maximize welfare, what
would be the housing price set in this new area?
Question 5:
Find at least three countries or economies that have housing
policies or measures to stabilize the housing markets.
Provide your views or suggestions on the best measure to stabilize
the housing markets that could be considered or used in Melbourne.