Question 1 (5 marks) You have been employed as an economist to advise the Department of Health and the federal government about the following issue. The minister has argued that raising the tax on alcohol is the most effective way to reduce alcohol abuse in our society. Do you agree or disagree? Explain why or why not. Question 2 (5 marks) Explain the difference between comparative advantage and absolute advantage. Answers should be typed and diagrams must be clear and neat and preferably drawn electronically. Hand-drawn diagrams are acceptable. The answer to the question should be divided into three parts: Part 1: Introduction The introduction sets up your response by succinctly stating your understanding of the issues, what think is the best way to analyse the situation – including choice of theory and sources of evidence, what type of findings you expect and what potential applications you expect there to be. Part 2: Analysis The analysis will represent the bulk of your work. Here you will provide your answer in detail by drawing upon the literature, the theory and the evidence to come up with an answer to the question posed. You may find that you want to break this section up into a number of sub-parts – one for a detailed discussion of the issues including your non-technical response, one for a detailed analysis of the tools of analysis you will use (theory), one for your extensive consideration of the evidence, one where you draw together your information and findings along with their implications. Part 3: Conclusion In the conclusion you briefly and succinctly review what you have done in answer to the question and indicate what further issues there might be to be considered.

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