Question 1: (10 marks)
In your own words, summarize the article, “Tourism Investment Monitor 2017,” by Tourism Research
Australia, October 2017. In particular, what are the main messages of the article? [Hint: Please link
your summary with relevant economic theories wherever you can]
Question 2: (10 marks)
Suppose that the Australia’s hospitality industry is perfectly competitive (i.e., many hotel
accommodation providers). The government decides to levy a buyer’s tax (specific tax) on hotel
accommodation. Use appropriate diagrams to answer:
(a) Examine the impacts of this buyer’s tax on the equilibrium price of hotel accommodation,
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 the government tax revenue?
Question 3: (10 marks)
Use appropriate diagrams to answer: Do you think increasing investments in the tourism industry is a
prudent economic policy to the Australian economy? Why or why not? [Hint: Please do literature
review to find out the pros and cons of the tourism industry to the Australian economy in terms of the
short-term and long-term impacts, etc.]
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