Identify the market structure the airline industry

Reference no: EM133630056 , Length: word count:1500

Economics

Section A: Microeconomics

Question 1
Identify the market structure the airline industry in Australia follows. Make sure you justify your choice of market structure using all of the market characteristics used to classify markets. Using your own independent research, provide some brief comments on the market participants and some fun/interesting facts about the industry.

Question 2
The global airline industry was severely affected by the pandemic and associated lockdowns and travel restrictions. Using your own independent research, explain the impact these events had on the Australian airline industry and, in particular, on Qantas. (Make sure you use reputable sources and reference your sources.)

Question 3
Comment on some appropriate actions the Australian Federal Government could take to protect the Australian airline industry from the effects discussed in Question 2. (You may like to do some independent research to help you answer this question.)

Question 4
Consider a "game" between Qantas and Virgin Australia that the airlines may participate in. The rules of the game are:

If both Qantas and Virgin Australia keep airfares low, then they will both make a profit of $500m.

If both Qantas and Virgin Australia keep airfares high, then they will both make a profit of $800m.

If one airline keeps airfares low and the other keeps airfares high, then the low airfare airline will make $900m profit and the high airfare airline will make $400m profit.

Using these rules, solve this game for the Nash equilibrium and make sure to include your diagram and the logic you followed to solve the game. Is your outcome the best one for both Qantas and Virgin Australia? Explain your answer.

Section B: Macroeconomics

Question 1
Using your own independent research, summarise the effect the pandemic and associated lockdowns have had on the Australian macroeconomy. At a minimum, your answer should include commentary about the effect on Australian GDP, unemployment, inflation and other aspects of the Australian macroeconomy. Support your comments with appropriate economic data. (Make sure you use reputable economic sources and reference your sources.)

Question 2
Draw a diagram of the Australian macroeconomy using the aggregate demand and aggregate supply (AD/AS) model before, and then after the pandemic. Clearly show on your diagram(s) the before and after effects for the macroeconomic variables discussed in Question 1.

Question 3
The Federal Australian Government was very aware of the effects of the pandemic on the Australian economy. Using your own independent research, explain the fiscal policy actions the Government undertook to combat the economic impact of the pandemic. (Make sure you use reputable economic sources and reference your sources.) Using your diagram from Question 2, show how the government action should have affected the Australian macroeconomy. Comment on how successful the government action has been, and identify any weaknesses associated with it.

Reference no: EM133630056

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