QuestionsYour group is required to critically evaluate this article written in reference to a report by Deloitte Access Economists(2017)and address the following:1.1Identify the market boundaryand market structure that Aldi has beenoperating inaccording to this article.In your explanation, clearly justify the characteristics of the market structure.51.2Critically evaluate the claims (made by the author inthis article) based on the concepts of elasticities:-“The conventional wisdom that grocery spending is largely immune from the economic cycle –because it falls into the basket of necessity rather than discretionary spending –has been thrown into doubt”; -“Entertainment subscription services is anotherarea that is moving from luxury to essential”; and-“The most resilient services were child care/education and housing…”.6PART 2: MARKET AND EXTERNALITIESContextAustralianfarmers have beenexperiencing the worst droughtof the past century (McCormack 2018). In August 2018, it was reported that 98 percent of NSW and almost two-thirds of Queensland is either in drought or is drought affected, with farmers in parts of Victoria, South Australia and Western Australia also suffering (Carey 2018).Some areas have even been in drought for periods ranging from oneyear to seven years. Farmers in these areas are losing their livestock as they struggle to feed and water them amidst increasing costs of stock feed and transportation.Questions2.1Using a diagram showing demand and supply curves, illustrate and explain how the drought affects market prices, market quantities, consumer surplus and producer surplus for an agricultural product.2.2 Using a diagram showing demand and supply curves, illustrate and explain how a government subsidy given to the farmers for an agricultural product will affect the product’s market prices, market quantities, consumer surplus and producer surplus.Identify and explain the differences in the agricultural product’s market prices, market quantities, consumer surplus and producer surplus if the government subsidy was given to consumers instead of farmers.7PART 3: AUSTRALIA GOVERNMENT BUDGET AND FISCAL POLICYContextFigure 3.1 shows the Australian government budget as a percentage of GDP between 2008 and 2017. It also shows this budget in deficit for over more than 7 years.Figure 3.1 Australia government budgetSource: Trading Economics 2018Questions3.1 What has causedthe government budget deficit in Australia over the last 5 years?3.2“When the government alters spending or taxes, the resulting shift in aggregate demand can be larger or smaller than the fiscal change”. Explain and illustrate diagrammatically.
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