ECON1101 Study Guide - Midterm Guide: Buzzfeed, University Of New South Wales, Perfect Competition
Now, we want to see how you apply the principles of economics to a current issue! The
Week 10 test will include a question about the recent proposal to allow first-time homebuyers
to use their superannuation savings to fund the deposit on a house.
• An article in The Australian briefly summarising the proposal.
• An opinion in favour of the proposal.
• An opinion against the proposal.
• A BuzzFeed article with 12 quick points from people who oppose the proposal.
The following question will appear on your Week 10 test:
A recent proposal to help make housing more affordable in Australia is to allow first-time
homebuyers to use their superannuation savings (that is, compulsory retirement savings) to
help pay for a house. This proposal has been criticised by a number of politicians,
commentators, and economists. One such criticism came from UNSW Professor Richard
Holden, who tweeted, “Using [superannuation] to buy housing shifts money directly from
young savers to old sellers. Complete own goal. 1st year econ-level stuff.”
Use this information to answer the following questions. You may assume that the market for
housing is perfectly competitive.
a. Is the supply of housing in the short run likely to be elastic or inelastic? Explain your
answer. (1 mark)
In the short run, supply of housing is inelastic- ie supply curve is very steep- construction
takes time
b. Using a graph, briefly explain how this policy is likely to affect the market
equilibrium price and quantity of housing in Australia. (1 mark)
Elasticity of supply of housing is low- demand increases- supply curve is very steep (nearly
vertical)- construction takes time that’s why its inelastic
c. Based on your answers to parts A and B, explain whether the predictions of the
demand-supply model you have studied in this course are consistent with Professor
Holden’s statement that this policy would “shift money directly from young savers to
old sellers.” (1 mark)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Now, we want to see how you apply the principles of economics to a current issue! The following question will appear on your week 10 test: A recent proposal to help make housing more affordable in australia is to allow first-time homebuyers to use their superannuation savings (that is, compulsory retirement savings) to help pay for a house. This proposal has been criticised by a number of politicians, commentators, and economists. One such criticism came from unsw professor richard. Holden, who tweeted, using [superannuation] to buy housing shifts money directly from young savers to old sellers. Use this information to answer the following questions. Holden"s statement that this policy would shift money directly from young savers to old sellers. (1 mark) Empirically: analytic framework to balance that tradeoff- ideological, Wsj: licensing rights (royalties: bowie bonds (celebrity bonds)- selling rights to future cf stream w royalties. Danika louise lena in court accused . 3million macquarie bank fraud- tradeoff.
