Assignment Overview:
This assignment is partly based on the attached article, “Australian
Housing Market Report,” Prepared for National Australia Bank
Ltd. by RP Data (November 2014). Please read this article
carefully before attempting the questions. You will be required to
demonstrate your understanding of economic concepts taught in
the unit and relate them to the cases in the article.
Question 1:
In your own words, summarize the article, “Australian Housing
Market Report,” Prepared for National Australia Bank Ltd, by RP
Data (November 2014). In particular, what are the main messages
of the article?
Question 2:
Using appropriate diagrams, figures and data to answer: Are the
Melbourne’s housing prices overheated? Why or why not?
Question 3:
Suppose that the Melbourne’s housing market is perfectly
competitive (i.e., many real estate developers). The city
government decides to levy a buyer’s tax (specific tax) on housing
purchases.
Using appropriate diagrams to answer:
(a) Examine the impacts of this buyer’s tax on the equilibrium
housing prices, consumer surplus, producer surplus, and total
surplus (or social welfare).
(b) Can an increase in the buyer’s tax raise social welfare?
(c) Can an increase in the buyer’s tax raise city government’s tax
revenue?
Question 4:
Suppose that city government decides to develop a new housing
area (i.e., the city government is like a monopolist).
Using appropriate diagrams to answer:
(a) If the city government’s objective is to maximize profits, what
would be the housing price set in this new area?
(b) If the city government’s objective is to maximize revenue, what
would be the housing price set in this new area?
(c) If the city government’s objective is to maximize welfare, what
would be the housing price set in this new area?
Question 5:
Find at least three countries or economies that have housing
policies or measures to stabilize the housing markets.
Provide your views or suggestions on the best measure to stabilize
the housing markets that could be considered or used in Melbourne

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