PLEASE DRAW SUPPLY AND DEMAND DIAGRAM AS PER THE QUESTION/ANSWER I), II) & III BELOW;

Amazon has been geo-blocking Australian consumers from accessing its international websites since July 1, 2018. This move was in response to changes to Australian tax law which required overseas retailers to collect a 10% Goods and Services Tax (GST) on goods sold to Australian customers. By using demand and supply diagram, explain the effect of Amazon's geo-blocking strategy on (i)Australian consumers is, (ii) Australian government revenue and (iii) Amazon's profit level (i.e., its surplus).

Answer:(i) The geo-blocking strategy implemented by Amazon reduces the supply of goods to Australian consumers as they are limited to purchasing from Amazon's Australian website, which has a smaller selection of products compared to its international websites. This reduction in supply causes a shift in the supply curve to the left, resulting in a higher equilibrium price and a lower equilibrium quantity of goods purchased by Australian consumers. Thus, Australian consumers face higher prices and limited choice due to Amazon's geo-blocking strategy.

(ii) The implementation of the 10% GST on overseas purchases was designed to increase government revenue. However, the geo-blocking strategy adopted by Amazon has resulted in reduced sales, and, hence, a decline in GST revenue collected by the Australian government. This reduction in revenue causes a shift in the government revenue curve to the left.

(iii) Amazon's geo-blocking strategy affects its profit level as it leads to a decline in sales in the Australian market. As a result, Amazon's supply curve shifts to the left, leading to a lower equilibrium quantity and a higher equilibrium price. This decrease in sales and increase in price result in a decline in Amazon's surplus, which is the difference between total revenue and total cost. However, it is worth noting that the extent of the impact on Amazon's profit level will depend on the elasticity of demand for Amazon's products. If demand is highly elastic, Amazon may face a significant reduction in its profit level.