Assignment
Question 1
Suppose a severe drought hits the sugarcane crop. Using a supply and demand model explain how this will affect the equilibrium price and quantity in the market for sugar and the market for honey.
Question 2
(a) Complete the following table of costs for the Pizza Company.
(b) Draw the total cost curve on one graph. On another graph, draw the marginal cost, average total cost and average variable cost curves.
(c) Are there output levels that exhibit increasing returns to scale?
(d) Are there output levels that display decreasing returns to scale?
|
Pizzas
|
Fixed costs
|
Variable costs
|
Total costs
|
Marginal costs
|
Average total costs
|
Average variable costs
|
|
0
|
$1000
|
$-----
|
|
|
|
|
|
200
|
$1000
|
$360
|
|
|
|
|
|
400
|
$1000
|
$840
|
|
|
|
|
|
600
|
$1000
|
$1440
|
|
|
|
|
|
800
|
$1000
|
$2160
|
|
|
|
|
|
1000
|
$1000
|
$3000
|
|
|
|
|
|
1200
|
$1000
|
$3960
|
|
|
|
|
|
1400
|
$1000
|
$5040
|
|
|
|
|
|
1600
|
$1000
|
$6240
|
|
|
|
|
|
1800
|
$1000
|
$7560
|
|
|
|
|
|
2000
|
$1000
|
$9000
|
|
|
|
|
Question 3
(a). What will happen to the bakery if a large retailer like Coles or Woolworths establishes a new store in a location close by and decides to price bread below cost as an opening special to attract customers? What will happen to the bakery if the new retailer continues this pricing behaviour for, say, one year?
(b). How should a monopoly choose its quantity of production to maximise profits? Explain why producing either less or more than the level of output at which marginal revenue equals marginal cost will reduce profits. Since a monopolist does not fear competition, what prevents it from raising its price as high as it wishes to make higher profits?
Question 4 (references needed)
A government implements heavy taxes on sugar-sweetened beverages (sugary drinks), as part of a comprehensive approach to decreasing overweight and obesity. You are required to write an essay to discuss this issue. Make sure that you clearly address the following questions in your analysis:
1) Using the supply and demand model explain why a tax can reduce the sales of sugar-sweetened beverages.
2) Explain whether the demand for sugar-sweetened beverages is elastic or inelastic.
3) Explain if an alternative policy such as a price floor policy (or any other policy) works in reducing the sales of sugar-sweetened beverages.
4) Critically evaluate or predict the effectiveness of the sugar-sweetened beverage tax as a policy in reducing the number of people drinking sugar-sweetened beverages.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.