Reference no: EM13137985

Question 1 

Using demand and supply analysis, including appropriate diagrams, explain the following: 
A new disease destroyed apple plantations. 
(a) Explain clearly the effect of this event on the demand and/or supply and on the equilibrium price and quantity in the market: 
• for apples 
• for oranges (5 marks) 

(b) Discuss what happens to the demand and or supply and to the equilibrium price and quantity in the market for housing as population increases and at the same time the government releases more land for housing. 


Question 2 

The government wishes to reduce consumption of alcohol and considers two strategies: 

1. an advertising campaign to emphasise the negative health effects of alcohol consumption; 

2. imposing a tax on alcohol. 

(a) Show and explain the expected effect of each strategy, outlined in (1) and (2), on the demand for and/or the supply of alcohol and on the equilibrium price and quantity.
(5 marks) 

(b) Advise what other factors the government should consider, in order to estimate the effect of these two strategies on alcohol consumption and on the government revenue from the tax on alcohol.