ECON1247 - Prices and Market - Fast Food and Takeaway Food Services - Commonwealth Government - Economics Assessment Answer

Assessment Task:

ECON1247 - Industry Project into the Market for Fast Food and Takeaway Food Services in Australia Economics Assessment Answer

Scenario

You are a Freelance Economics Consultant who has been commissioned by the Commonwealth Government to analyse the state of affairs in the Fast Food and Takeaway Food Services in Australia and report your findings to the Government.

Task

Access the IBIS World report on the industry of Fast Food and Takeaway Food Services in Australia and answer the questions below, in your own words. 

To access the IBIS World Report, go to RMIT’s home page. Then select ‘Library’ and launch ‘Databases A-Z’. After this, select the popular database of ‘IBIS World.’ Once in the database, search for ‘Fast Food and Takeaway Food Services in Australia.’

1. The market

1.1    Define the market. In your answer, you will need to identify the buyers, sellers and the product(s) exchanged.      

1.2    Identify the market structure of fast food and take away food services.  Explain how you reached your decision using economic theory and facts.

2. Analysis of the market

So far, you have examined the industry of Fast Food Services in Australia as a whole. Now consider the market for traditional fast food in Australia specifically.  Traditional Fast Food is defined as takeaway food including burgers, pizza, chicken, fish and chips, pies, sausage rolls and pastries as opposed to healthier alternatives.

2.1 Identify and briefly analyse two relevant conditions (determinants) of demand that have prevailed in this industry in the past five years. 

2.2 Identify and briefly analyse two relevant conditions (determinants) of supply that have prevailed in this industry in the past five years. 

2.3 Illustrate the above changes in a demand and supply diagram for the market of traditional fast food showing clearly the impact on the equilibrium price and quantity

2.4    Elasticity

2.4.1    Using economic theory and facts discuss and explain the probable price sensitivity of traditional fast food. 

2.4.2    Would a significant rise in the price of home-cooked meal replacements offered by supermarkets have any impact on traditional fast food? Explain.

2.5    Government intervention.

2.5.1    Outline the existing level of government intervention in the whole industry of fast food services in Australia based on the information available. Give two examples of government intervention in the market for fast foods.

2.5.2    Analyse the impact the level of government intervention is having on the industry. Consider both the firm and consumer perspectives.

3.0 Further Analysis of the Market - Externalities

In your opinion, explain whether you believe there is any type of externality present in the market for traditional fast food.  If an externality is present, describe what action is available to the government in order to eliminate the externality.  Illustrate both situations using two graphs – one showing the unregulated market and the other showing the government intervention. 

4. Analysis of the future market

4.1 Given the current trends, how is the demand for traditional fast food likely to change in the next five years? Explain. 

4.2 Given your answer in 4.1 what would you, as an Economics’ Consultant, recommend to businesses in traditional fast food?
So far, you have examined the industry from the perspective of traditional fast foods in Australia. Consider now the Market for ‘healthier’ fast foods in Australia specifically. Healthier fast foods are defined as fast foods with less fat, sugar and salt including foods such as sushi, salad, yoghurt, wraps, sandwiches and fruit. 

4.3 How is demand and supply of healthier fast foods likely to change in the next 5 years? In your answer, briefly discuss two relevant conditions (determinants) of demand and two relevant conditions (determinants) of supply. 

4.4 Illustrate the above changes in a demand and supply diagram showing clearly the impact on the equilibrium price and quantity of Healthier Fast Foods in Australia.

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