Project Title: Life Project Analysis of Fast Food Services in Australia
This project provides students with an opportunity to research into life microeconomic aspects of the Fast Food Services industry in Australia.
The aim of the project is to give students an opportunity to apply microeconomic concepts and tools covered in class to a practical context.
This project covers the following course learning outcomes:
CLO 1: understand the basic microeconomic problems facing society
CLO 2: understand the interaction of demand and supply in the market place
CLO 3: demonstrate some familiarity with sources of business data
CLO 6: have an awareness of the possible causes of market failure and the role of the government
CLO 7: understand concepts and analyse problems, both numerically and diagrammatically, rather than attempting to memorise and quote correct answers
CLO 8: be able to apply simple microeconomic theory, using appropriate techniques, to some practical problems.
You are a Freelance Economics Consultant who has been commissioned by the Commonwealth Government to analyse the state of affairs in the industry of Fast Food Services in Australia and report your findings to the Government.
Access the IBIS World report on the industry of Fast Food Services in Australia and answer the questions below, in your own words.
To access the IBIS World Report, go to RMIT’s home page. Then select ‘Library’ and launch ‘Databases A-Z’. After this, select the popular database of ‘IBIS World.’ Once in the database, search for ‘Fast Food Services in Australia.’
You can also use any other resources you find relevant during your research.
- Overview and Market Structure
- Provide a brief overview of the industry i.e. a definition of this industry, its products and main activities. (maximum 40 words)
- Identify the market structure of the industry. Explain how you reached your decision using economic theory.
(maximum 200 words)
- Demand and Supply Analysis
- Using demand theory, analyse three conditions (determinants) of demand that are prevailing in this industry.
(maximum 230 words)
- Using supply theory, analyse three conditions (determinants) of supply that are prevailing in this industry.
(maximum 230 words)
- Market Analysis
- Market for Traditional Fast Food in Australia:
- So far, you examined the industry of Fast Food Services in Australia as a whole. Consider now the Market for Traditional Fast Food in Australia Traditional Fast Food is defined as takeaway food including burgers, pizza, chicken, fish and chips, pies, sausage rolls and pastries as opposed to healthier alternatives. Using a demand and supply diagram, illustrate the initial situation in the market for traditional fast food, clearly identifying the equilibrium price and quantity. Provide a brief explanation.
- Based on the information available about the market, decide on the overall changes to demand and/or supply in the next few years and illustrate these in the graph clearly labelling the changes clearly. Explain your answer in part A above as to how you came to those conclusions.
(maximum 450 words)
- Define and briefly explain the concepts of own price elasticity of demand and income elasticity of demand for traditional fast food.
- Using economic theory and facts discuss and explain the probable price sensitivity of traditional fast food.
- Would a rise in the price of traditional fast food have any impact on healthier food alternatives?
(maximum 300 words)
- Government intervention.
- Outline the existing level of government intervention in the whole industry of fast food services in Australia based on the information available. Give two examples of government intervention noted in the report.
- In your opinion, explain whether you believe the level of government intervention is impacting the industry and how. Consider both the firm and the consumer perspectives.
(maximum 300 words)
Further Analysis of the Market
- In your opinion, explain whether you believe there is any type of externality present in the market for traditional fast food. If an externality is present, describe what action is available to the government in order to eliminate the externality. Illustrate both situations using two graphs – one showing the unregulated market and the other showing the government intervention.