Economics analysis


            Australian Universities received about 350,000 international students in 2014 with domestic enrolment exceeding one million. The choice for programs for study was very important for future enhancement. For domestic students, humanities and commerce remain the most popular programs of study. However, health and science enrolment show the fastest growth. Therefore, with slow transition rate from university to career, the rate of unemployment has remained low. The paper describes the visibility of wants and choice among the students in school.

There are various types of products. A Normal product is one where an increase in income results to an increase in the quantity demanded while an Inferior product is one an increase in income results to a decrease in the quantity demanded (McKinnon, 2010). For example, product likes apples in the market. This type of a normal good where an increase in the income of the people in the society leads to an increase in the quantity demanded. For example, an increase in the price of apple will make people to turn to other fruits like Bananas and oranges.


Taxation from the government to the buyers will shift the demand of the product to another level. For example, if the government requires the buyers to pay a tax of $ 0.5 for each ice cream they buy in school. The effective price for the buyers will now be $0.5 higher compared to the market price. The tax will shift the demand of ice cream downwards. For example the Graph below illustrates the nature of the shift on demand the tax imposition will have;

From the graph it is worth of notice that although the tax is imposed on the buyers, the burden of the tax rate falls on both the buyers and sellers. For instance, the tax creates a wedge between the price buyers (students) would pay that is $3.30 and the price the sellers would receive as $ 2.80. Therefore, the price buyers pay is $0.3o higher than the equilibrium price without the tax effects while the price sellers receive is $0.20 lower than the one in the equilibrium without the imposed tax.

Fixed costs are costs that don’t vary with the quantity of the output produced while the variable costs are the costs of inputs that a business can change in the short run without any hindrance. The fixed cost occurs when the business does not produce any goods or service (Quah, 2007).

Image result for a sample fixed cost and variable cost graph for ice cream

Toyota Company uses medium factor in order to produce about 1000 cars at a cost of $20,000. In case the company wants to increase its production from 1000 to 1200, the company has to increase the number of workers by hiring more of them. Therefore, as the marginal product is diminished then the Average Total cost will eventually go up. In the long run, the Company can think of expansion and so the cost wills possible returns to $20,000.

Every short run average Total cost is measured for a particular level of the fixed inputs. In the short run, it has to use the short run curve corresponding to the decision made in the past. However, in the long run, the curve lies below short run average curves. Basically, in the long run the business gets to choose the short run curves it wants to utilize (Coase, 2006).


Student’s enrolment in the Australian Universities in 2014 has improved significantly. After the enrolment, the Student exercised choice to the programs for study during their periods within the universities. For example, domestic students still maintained the choice of humanities and commerce. This has made the graduates to earn more than what the graduates who finish at year 12.  


Coase, R. H. (2006). The marginal cost controversy. In Inframarginal Contributions to Development Economics (pp. 29-46).

Figge, F., & Hahn, T. (2012). Is green and profitable sustainable? Assessing the trade-off between economic and environmental aspects. International Journal of Production Economics, 140(1), 92-102.

McKinnon, R. I. (2010). Money and capital in economic development. Brookings Institution Press.

Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.

Norton, A. (2016) Mapping Australian Higher Education 2016, GRATTAN Institute.

Quah, E. (2007). Cost-benefit analysis. Routledge.

Tribe, J. (2011). The economics of recreation, leisure and tourism. Routledge.

Zumeta, W., Breneman, D. W., Callan, P. M., & Finney, J. E. (2012). Financing American Higher Education in the Era of Globalization. Harvard Education Press. 8 Story Street First Floor, Cambridge, MA 02138.

Slides from Lecture1 to Lecture5 provided.         

Leave a Reply