Southwest Airlines is a major carrier based in Texas, and has made a strategy of cutting fares drastically on certain routes with large effects on air traffic in those markets…..
Explain whether elasticity has changed. If so, how has price and income elasticity changed?
The Federal government has introduced JobKeeper payments to tackle the rising unemployment due to COVID-19. Loss of employment has meant a loss of income; this means we are experiencing a decrease in individual demand by households. With affordability now low, income elasticity of demand has been impacted. This paper requires you to use microeconomic analysis to assess how individual demand can be improved.
Question 1: 1. Is JobKeeper effective in retaining casual employment? How is it impacting individual demand? Do individuals have enough purchasing power to continue buying goods as normal? Explain whether elasticity has changed. If so, how has price and income elasticity changed? Provide evidence and use supply and demand diagrams to support your answer.
Question 2: 2. Is this change in demand having an impact on the supply side? Will moving some manufacturing back to Australia help? If yes, what strategies can the government adopt to help grow individual industries? Is this likely to influence consumer and producer welfare? Will there be a dead weight loss? Provide evidence and use supply and demand diagrams to support your answer.