Suppose that the Australia’s hospitality industry is perfectly competitive (i.e., many hotel and/or accommodation providers). The federal government decides to levy a buyer’s tax (specific tax) on hotel accommodations. Use appropriate diagrams to answer: (a) Examine the impacts of this buyer’s tax on the equilibrium rental 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 the federal government’s revenue?
Use appropriate diagrams to answer: Do you think increasing investment in Australian tourism industry is a prudent economic policy for the future sustainability? Why or why not? [Hint: Please do an extensive literature review to find out the pros and cons of the global tourism industry, their short term and long term impacts, etc.]