ECO10250 Economics For Decision Making - Assessment 1 Session 2

Question 2

a. In February 2020 it was reported that Australia’s solar power capacity could almost double in a year.

1. Use demand and supply curves of solar power to show this doubling of capacity. (2 marks)
2. Use demand and supply curves of solar power to show what is likely to happen to demand for solar power over time in response to the capacity increases. (2 marks)
3. Use demand and supply curves of solar power and coal-fired power separately to show what is likely to happen to demand and supply of solar power if the government introduces a tax on coal-fired power. (4 marks)

b. In an attempt to support the solar-powered motor vehicle industry the government decides to set a minimum price for solar-powered vehicles. Do you think this is a good idea? Explain your decision with the aid of a diagram. (2 marks)