Assignment 1
Note that when you are answering questions that require mathematical calculations, you should provide details as to how the answers were derived. In completing your answers, you should use graphs wherever possible. Always provide a brief explanation of each graph, including how it relates to your overall answer/argument.
Question 1
a. Explain why a production possibility curve is usually bowed outward rather than being a straight line.
b. Jane has been unemployed for nearly a year but finds a high-paying job with an international hotel firm. Does this mean that Jane will no longer experience the problem of ‘scarcity'? Explain the reasons for your answer.
c. Every country has an economic system that has been established to address the problem of scarcity. Describe the economic system of a country other than Australia. Justify your assessment of the system by considering the major factors that determine an economic system within a country (300 words maximum).
Question 2
a. The table below shows the demand and supply for ice creams.
|
Price of an ice cream ($)
|
Quantity demanded ('000)
|
Quantity supplied ('000)
|
|
0.00
|
19
|
0
|
|
0.50
|
16
|
0
|
|
1.00
|
13
|
1
|
|
1.50
|
10
|
4
|
|
2.00
|
7
|
7
|
|
2.50
|
4
|
10
|
|
3.00
|
1
|
13
|
i. Graph the following demand and supply schedules.
ii. What is the equilibrium price and quantity in this market for ice creams?
iii. Calculate the consumer surplus and producer surplus at the equilibrium in this market.
iv. Assume that the demand schedule for ice creams outlined above is for summer. What do you think will happen to equilibrium price and quantity for ice creams during winter? Explain the reason for your answer.
v. What do you think will happen to consumer and producer surplus as a consequence of the change in equilibrium price and quantity for ice creams during winter? Explain the reason for your answer.
Question 3
The government has decided that the free-market price for milk is too low.
i. In an attempt to help dairy farmers increase their income the government imposes a price floor in the milk market. Use demand and supply diagrams to illustrate the impact of this policy on the price of milk and the quantity sold as well as the state of the market.
ii. Can dairy farmers be assured of an increased income? Explain your answer.
iii. Would it be a good decision for the government to purchase all the surplus product? Explain your answer.
Question 4
a. Complete the table below. In your calculations use the midpoint method to calculate the price elasticities.
|
Price ($)
|
Quantity demanded
|
Total revenue
($)
|
Percent change in price
|
Percentage change in quantity demanded
|
Elasticity
|
Assessment of Elasticity
|
|
2
|
10
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
8
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
6
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
4
|
20
|
|
|
|
|
b. During a holiday period do you think the price elasticity of demand for airline tickets would be the same as in the off-season or would it become more elastic or more inelastic? Explain your answer.
Question 5
a) Complete the cost schedule below for a gardening company:
|
Quantity of gardens
|
Total Fixed Cost (TFC)
$
|
Total Variable Cost (TVC)
$
|
Total Cost (TC)
$
|
Marginal Cost (MC)
$
|
Average fixed cost
(AFC)
$
|
Average variable cost
(AVC)
$
|
Average total cost
(ATC)
$
|
|
0
|
10
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
154
|
|
|
|
|
b. If the firm is operating in a perfect market where the price for gardening at one house is $20 dollars, how many gardens should this company do in order to maximise profit? Explain your answer.
d. Graph the average variable cost, average total cost and marginal cost and marginal revenue curves.
Assignment 2
Requirement:
In August 2016, Glenn Stevens, the then Governor of the Reserve Bank of Australia, presented an overview of the world and Australian economies (see https://www.rba.gov.au/speeches/2016/sp-gov-2016-08-10.html). For Assignment 2 you are required to firstly read this speech and to then prepare a report on the current (i.e. September 2017) state of the Australian economy and compare its performance with state of the economy in August 2016. You could use the RBA report to guide your thinking on how to prepare your report. In completing your report it will be necessary to examine the latest figures for the following four economic indicators - economic growth (GDP), unemployment, inflation and trade (including the terms of trade, the current account, net foreign debt and the value of the Australian dollar). In examining the performance of the Australian economy it will be useful to outline any expected target values that exist for the economic indicators. Finally, given your analysis, you are asked to highlight three major issues facing the Australian economy over the next 12 months and why you perceive these as of concern.
Presentation of report
The report should be between 1500 and 2000 words. This word limit does not include the abstract, tables, graphs and reference list.
The report should be word processed using Times New Roman font size 12 with 1.5 line spacing.
Structure of report
Your report must include:
- an appropriate title
- an abstract (sometimes called an executive summary) summarising the report
- an introduction in which you briefly explain what you are going to address in the report and why
- the body of the essay broken into sections with appropriate section headings
- a brief conclusion that should summarise your analysis
- appropriate in-text referencing and a reference list at the end of the report.
Although the requirements for presentation and structure may appear pedantic, they are not. In the business world you may often find yourself involved in writing a report - perhaps even for multilateral and government organisations such as the IMF or OECD. We suggest that you devote some time to developing this skill. Your future career can only be enhanced by your ability to communicate effectively in writing.
Your report will be marked against the following criteria:
- Abstract
- Introduction
- The body of the report providing:
o An appropriate description and discussion of the current state of the Australian economy as reflected by the four economic indicators - economic growth, unemployment, inflation and trade in Australia and the economy in 2017.
o A succinct description of three major issues facing the Australian economy over the next 12 months.
- Conclusion
- Evidence in the report of a depth of research
- Accuracy in referencing (Harvard Style)
- Presentation, grammar, structure, etc.
Length: 1500 - 2000 words