The paper "Economic Implications of the Internet in Australia" is an outstanding example of a micro and macroeconomic assignment. LVT Stand for Low-value threshold. It is assumed that the LVT is reduced up to $ 500. The supply curve shifts to the right making the price of the good to decrease from $ 1000 to $ 500. This has also made the quantity that was imported to increase from Q0 to Q1 as illustrated in the diagram above. The retailers can import at a lower cost than when there is LVT.
This makes the quantity that is supplied in the market system to increase (McAfee, 1990). This is a similar case to the introduction of online retail that increases the market for the goods that are manufactured. Question 3 Regional Price Discrimination Price discrimination is where the prices of goods and commodities are changed for different customers from different regions in a country (Day, 1997). There are various reasons that make a country to resolve regional price discrimination. One of the reasons for this is to ensure that economic resources are distributed fairly across all sectors of the economy.
Some of the areas of economies are charged higher prices than others; this ensures that people living in these areas demand more of certain goods (McEachern, 2012). There are three types of price discriminations; the first, second and third-degree of price discrimination. Price SS0 P0 P1 QO Q1 Quantity Price discrimination when there is no online retailing occurs in the region above P0 and demand curve DD0. This is an area that is less elastic because the retailers depend on only one strategy which is using retailing only. Due to the introduction of online retail, the price of the product becomes more accessible to retailers.
They increase from Q0 to Q1 while the price decreased from P0 to P1. Question 4 Firm X Retailer Retailer and Online Shop 50,50 30,80 Shop and Online 80,30 60,60 Dominant Strategy Yes, Australian Company has a dominant strategy which is always sold in shops only. This is because when the retailer sells in shop only he will have a payoff of 50, the other competitor shops in retailers only due to the fact that he maximizes his payoffs more than any other point (McAfee, 1990).
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