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November 14, 2024
Globally, food prices have risen over the last year. In this context, please respond to the following inquiries:
The prices of homes in Australian major centers, notably in Darwin, Sydney, and Melbourne, have increased in recent years, mostly owing to escalating land costs. In this context, please respond to the following inquiries:
Sorne Australian state and territory governments have prohibited or are intending to prohibit plastic shopping bags owing to the adverse externalities resulting from their excessive use.
Elucidate the externality associated with plastic containers and bags. What is the most effective method to mitigate or manage negative externalities? Engage in discourse.
Construct a graph to demonstrate the welfare loss attributable to plastic containers and bags.
In recent years, food prices have risen significantly, adversely impacting the general populace. Low-income individuals are the most affected, and the substitution effect significantly influences their food purchases. Moreover, individuals' income influences their food purchases, which will be elucidated in this economics assignment. In addition to worldwide food prices, the Australian property market saw a significant increase in its pricing structure, and the factors contributing to this escalation will be further upon in this economics assignment. Furthermore, the Australian government has recommended a ban on plastic containers owing to their detrimental effects on the environment. Plastic containers and bags contribute to welfare loss, which will be elaborated upon in this economics assignment.
1.1 Law of Demand for Food: The law of demand posits that an increase in the price of any items would lead to a fall in the sales volume of the specific food products. In microeconomics, a rise in price is inversely related to the quantity purchased of that item. Consequently, a rise in food costs would lead to a decrease in demand for food goods. Barclay & Smith (2016:19) noted that the law of demand applies to food goods because of the influence of the substitution effect on them. It has been shown that as food costs increase or accelerate, individuals tend to swap some food items with other goods. The majority of individuals like home-cooked meals due to their much lower cost compared to bought items. Asche et al. (2015:151-160) said that the elevated cost of this item will negatively affect its purchase rate.
The predominant move towards home-cooked meals among the populace may be attributed to the significant rise in food costs. Consequently, it may be said that, in accordance with the law of demand, rising food costs have negatively affected the purchasing rate of food items.
1.2 Impact of the substitution effect on international food consumption: It has been noted that the majority of individuals are transitioning to home-cooked meals as a result of rising food costs. Valin et al. (2014:51-67) indicated that food costs have risen significantly in recent years, adversely impacting purchasing rates. Individuals resort to lower-quality dietary options, which adversely impacts their health problems. The physical health of many individuals is adversely impacted by the consumption of lower-quality meals. Individuals with low income are mostly impacted since they cannot purchase these expensive goods. Moreover, several individuals modify their diets to reduce daily food intake. This would enable individuals to save funds for future use, thereby indicating that the heightened food purchase rate generally impacted their health.
Many individuals have been noted to eat twice daily to economize. The prolonged fasting period adversely impacts their physical health. Consequently, it may be said that the rising food prices have adversely impacted public health, as individuals have replaced their diets with more affordable food options.
1.3 Impact of Income on Food Purchases: A stable income level is inversely related to the increase in food prices and the decrease in food product prices. An individual with a consistent income of $400 may have the ability to get regular food items. If a someone has a monthly salary of $1000, they may be inclined to purchase high-quality and costly food goods. Conversely, when income remains constant and food prices increase, regular access to high-quality food becomes challenging. Australia ranks as the 12th highest nation in terms of cost of living globally. The entire cost of living in this nation exceeds that of the USA by 9%.
Figure 1: Wage growth in Australian companies
(Source: news.com.au, 2018)
The graph indicates that the pace of wage increase in the Australian economy is quite modest. The impact of elevated food prices is influencing the cost of living. It is expected that a middle-class Australian household must expend $45 everyday. Conversely, the sluggish growth rate in incomes imposes obstacles to the accessibility of regular food goods for the whole population. The limited bargaining power of customers hinders their ability to obtain items within a suitable range in the market.
2.1 Justification for the escalation of land prices in Australia: The population increase in Australia has been higher in the recent decade compared to prior years. Furthermore, the steady mortgage rate is significantly decreasing relative to economic stability. To get a steady mortgage, individuals are increasingly interested in owning land in Australia. In the housing sector, corporations are encountering difficulties in providing new residences due to the erratic nature of the land supply pipeline. Conversely, Favilukis et al. (2017:140) said that the robust demand for housing is driven by individuals seeking reliable property access in the market.
Figure 2: Number of sales and high value in Land purchasing market of Australia
(Source: corelogic.com.au, 2018)
The data indicates that since 2016, the disparity in land acquisition rates has been increasing. Sydney, Melbourne, and Perth are the primary locations where the price per square meter significantly exceeds the standard selling rate.
2.2 Elucidation of the rapid house prices using a diagram: property affordability is a significant problem that mostly drives the increase in property prices in Australian cities. The strong demand for homes in Sydney, due to its status as the busiest region in the nation and its superior transport and communication facilities, results in elevated property prices compared to other locations. Conversely, locations like as Darwin and Melbourne are very appealing and conducive to a leisurely lifestyle. Beer et al. (2016:1542) said that individuals are concentrating on these areas in their pursuit of a somewhat tranquil environment. Affluent Generation X and Baby Boomers are frequenting these locations for lifestyle purposes. Wealthy individuals often purchase homes to occupy for just two or three weeks annually. These trends are indirectly impacting the housing market in a long-term and cumulative manner.
Furthermore, the matter of immigration has been identified as a significant factor affecting house prices in this area. Immigrants preferentially seek accomodation in large cities, resulting in a shortage of housing options. Statistics indicate that 86% of immigrants reside in big cities in Australia, whereas 65% of natives inhabit these areas.
Figure 3: Accelerated housing sales in Australia
(Source: corelogic.com.au, 2018)
2.3 Elasticity of Land in Metropolitan Areas: The supply of land is consistently characterized as inelastic, since land economics indicates that land prices do not influence land supply. According to Kim et al. (2018:39), a land value tax that appropriates property rent for public uses does not influence the opportunity cost of land use; rather, it only diminishes the value of ownership. This perspective suggests that land fluctuates in availability, and land inventories have an inverse connection to price, indicating negative elasticity. Land elasticity suggests that it mostly occurs in relation to sectoral employment development within a nation. An claim on inelastic land supply aligns with ordinary experience. Sato & Xiao (2015:63) indicate that cities with elevated land values often undergo less development compared to those with lower land values. It may be concluded that either the supply of land is inelastic or land prices have little influence on house supply.
3.1 Increasing externalities from plastic containers
The disposal of plastic bags and containers has emerged as a significant issue due to their non-biodegradable characteristics. Chemical stability ensures the integrity of plastic materials in the environment. Plastic garbage on coastal beaches, parks, and tourist attractions adversely affects visitors.
The impact on marine ecosystems: 60-80% of plastic garbage contaminates saltwater, adversely affecting marine natural systems. The ingestion and entanglement of deleterious plastic trash result in toxicity for marine life. Photodegradation and mechanical wear cause plastic garbage to decompose into microscopic particles of debris. Observing and quantifying, particularly on coastal beaches, is undoubtedly challenging.
Toxic emissions from plastics: The hazardous emissions resulting from the combustion of solid trash are a significant contributor to adverse externalities. The gases emitted during decomposition are very detrimental, since they include cyclic chlorinated hydrocarbons. The emissions from PVC incineration and hydrogen chloride are very harmful to both humans and animals. According to Wardrop et al. (2017:74), these emissions contribute to the formation of acid rain.
The recycling process for plastics is ineffective, with a recycling rate of less than 25%, far lower than that of other recyclable materials. The inconsistency in the recycling process has led to a continuous increase in plastic trash and a worsening environmental effect each year. Landon-Lane (2018:310) posits that the diminished market for products made from previously used plastic materials accounts for the low recycling rate. The plastic business is concentrating on using cost-effective polymer-based products, which are not recyclable. These elements consistently influence the nation's atmosphere.
To mitigate adverse effects, it is essential to refrain from using plastic bags and containers in daily life. It is essential to maintain a prohibition on plastic bags. Willis et al. (2017:45) assert that a complete prohibition of plastic bags is unfeasible due to their integral role in daily life. The professor argues that using other materials of equivalent value may constitute a superior solution. Ireland has implemented a fee on plastic bags, a successful strategy to reduce their use. According to the Biodiversity Conservation Act of 1999, the use of plastic bags must be minimized inside the nation. This measure might swiftly mitigate the adverse effects in the state of Australia.
Figure 4: Number of welfare activities that hampered due to plastic containers
(Source: corelogic.com.au, 2018)
The following graph indicates that Australia is experiencing challenges with plastic garbage disposal. Lamb et al. (2018, p. 460) indicate that welfare efforts have been persistently hindered by the extensive usage of plastic bags. Plastic bags, being non-biodegradable products, need 400 years for decomposition. Australia is a culturally endowed destination, renowned for its appealing historical tourism sites. As the country develops as a cultural and tourism destination, plastic garbage is detrimentally impacting its picturesque beauty. Due to the absence of regulations on plastic bag use, both visitors and locals often discard the bags after use. It not only impacts the ecology but also diminishes the aesthetic appeal of this location. A significant effect pertains to health welfare initiatives. Australia often offers superior medical infrastructure for healthcare service customers. Medical procedures and activities create substantial trash, with plastics being 69% of this total.
The substantial proportions of medical waste not only impede welfare initiatives but also adversely affect service consumers. Auxilio et al. (2017:143) assert that the availability of fresh water may become unfeasible in the coming years due to the presence of a layer of plastic and plastic garbage inside the Earth's interior. It will generate water shortage not just in Australia but also in many other nations. Australian cities are renowned for their cleanliness and aesthetic appeal. Plastic containers obstructed the drainage system, adversely impacting human lives via waterlogging and several other activities. The pollution level is a significant problem that is indirectly exacerbated by plastic bags in Australian cities. While the government endeavors to reduce carbon emissions from industry and vehicles, the impact of plastic bags is causing a lasting detrimental effect on the environment and human well-being.
The aforementioned economics assignment concludes that global issues and developments are impacting both human life and the environment. The economics assignment has assessed the current factors influencing the lifestyle in Australian cities based on three topics. The rise in food prices is influenced by various indirect variables. This economics assignment indicates that both manufacturing costs and rising profits contribute to the improvement of food goods. The problem has highlighted the escalation of land and house prices in Australian major centers. The rising number of immigrants and the inclination to get reliable mortgages are the primary causes in this situation. Furthermore, the tendency to reside in highly developed areas is another significant contributing factor. The prohibition of plastic bags is a significant problem that impacts both the environment and human lifestyles. The debate indicates that while the government is attempting to reduce plastic use, there is a decline in welfare activities.
References
Barclay, K., & Smith, G. (Eds.). (2016) East Asia's Demand for Energy, Minerals and Food: The International Politics of Resources. Abingdon: Routledge.
Asche, F., Bellemare, M. F., Roheim, C., Smith, M. D., & Tveteras, S. (2015) Fair enough? Food security and the international trade of seafood. World Development, 67, 151-160.
Auxilio, A. R., Choo, W. L., Kohli, I., Srivatsa, S. C., & Bhattacharya, S. (2017). An experimental study on thermo-catalytic pyrolysis of plastic waste using a continuous pyrolyser. Waste Management, 67, 143-154.
Beer, A., Bentley, R., Baker, E., Mason, K., Mallett, S., Kavanagh, A., & LaMontagne, T. (2016). Neoliberalism, economic restructuring and policy change: Precarious housing and precarious employment in Australia. Urban studies, 53(8), 1542-1558.
Favilukis, J., Ludvigson, S. C., & Van Nieuwerburgh, S. (2017). The macroeconomic effects of housing wealth, housing finance, and limited risk sharing in general equilibrium. Journal of Political Economy, 125(1), 140-223.
Kim, J. H., Hipp, J. R., Basolo, V., & Dillon, H. S. (2018). Land Use Change Dynamics in Southern California: Does Geographic Elasticity Matter?. Journal of Planning Education and Research, 38(1), 39-53.
Lamb, J. B., Willis, B. L., Fiorenza, E. A., Couch, C. S., Howard, R., Rader, D. N., ... & Harvell, C. D. (2018). Plastic waste associated with disease on coral reefs. Science, 359(6374), 460-462. Landon-Lane, M. (2018). Corporate social responsibility in marine plastic debris governance. Marine pollution bulletin, 127, 310-319.
Sato, Y., & Xiao, W. (2015). Land development, search frictions and city structure. Regional Science and Urban Economics, 50, 63-76.
Valin, H., Sands, R. D., van der Mensbrugghe, D., Nelson, G. C., Ahammad, H., Blanc, E., ... & Heyhoe, E. (2014) The future of food demand: understanding differences in global economic models. Agricultural Economics, 45(1), 51-67.
Wardrop, N. A., Dzodzomenyo, M., Aryeetey, G., Hill, A. G., Bain, R. E., & Wright, J. (2017). Estimation of packaged water consumption and associated plastic waste production from household budget surveys. Environmental Research Letters, 12(7), 74-85.
Willis, K., Maureaud, C., Wilcox, C., & Hardesty, B. D. (2017). How successful are waste abatement campaigns and government policies at reducing plastic waste into the marine environment?. Marine Policy, 12(7), 45-55. Available from: https://www.sciencedirect.com/science/article/pii/S0308597X17305171[Accessed 30th August 2018]
corelogic.com.au (2018). Corelogic.Com.Au Available from: https://www.corelogic.com.au/sites/default/files/2017-08/2015-09-17--property-pulse-article.pdf [Accessed 30th August 2018]
corelogic.com.au (2018). Corelogic.Com.Au Available from: https://www.corelogic.com.au/sites/default/files/2017-08/2015-09-17--property-pulse-article.pdf [Accessed 30th August 2018]
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