Inelastic Product

Discussion question 1 (10marks)
Considering oil as an inelastic product, discuss why OPEC can not keep price of oil high? You need to consider type of good, price elasticity of demand and supply, and the time factor. Your answers must company two diagrams, one for each time frame.
Discussion question 2 (10 marks)
Discuss binding price ceiling and binding price floor with an example. Your answers must company two diagrams, one for each. You are allowed to refer to concepts/context in prescribed text book, however, discussion will have to come from academic sources.
Discussion question 3 (15 marks)
Discuss various measures of cost by completing the following table. This should include fixed and variable costs, average total cost, average variable cost, average fixed cost, and marginal cost. Show all of these in one diagram in relation to Quantity and Price.

Discussion question 4 (15 marks)
Discuss inflation and monetary policies. Using two diagrams for parts a) and b) below, discuss:
a) how supply and demand for money determine the equilibrium price level.
b) Consequences of increase in money supply.
Discussion question 5 (15 marks)
In times of recession and inflation Reserve Bank of Australia (RBA) may consider changing the interest rates. Using two diagrams one for expansionary monetary policy and one for contractionary monetary policy discuss how quantity of money supplied and interest rates are linked.
Discussion question 6 (15 marks)
Assume that an economy is in equilibrium in terms of Price level based on consumer price index (CPI) and real GDP, with a CPI of 200 and real GDP of 500 (b$). The economy is experiencing high unemployment and the government intends to achieve near full employment by increasing real GDP to 550 (b$). How aggregate demand oriented expansionary fiscal policy by the government will increase aggregate demand? Discuss both a) demand-side fiscal policy and b) supply-side fiscal policy with a diagram for each.