ECO10250 Assessment 1 Session 2

This first assignment consists of five questions based on topics covered in the early part of this unit. The purpose of this assignment is to give you the opportunity to demonstrate the skills you have acquired in this unit.

The assignment due date provided here applies to the Australian study period. This may be varied for students studying elsewhere, so please confirm dates with your local tutor.

Students must submit Assignment 1 online via Turnitin, the online submission facility on the MySCU website for this unit. You must attach an electronic cover sheet (available in MySCU in the Assessment Tasks and Submission icon) as the first page of your assignment otherwise your assignment will NOT be marked. You should keep a copy of all submitted materials. It is important that you that you keep your receipt from Turnitin (it is sent to you once you submit your assignment) and make sure your score is acceptable. A value of over 50 per cent (not including repeating the questions) should raise some concerns for you. You will be able to check your Turnitin score more than once but be aware the first time you submit your assignment you will receive a score very quickly however your subsequent results may take up to 24 hours to get to you.

References and Referencing

Most of assignment no. 1 can be answered if you have studied the textbook. However you may seek other sources here and there (question 5a especially) so it is important to be aware that material posted on the web may not always be reliable. You are advised to carefully consider the authenticity of all sources of the information before using it in assignments.

It is also important to use Harvard-style referencing for external material used in your work. For assignment no. 1 you do not need to reference the Layton et al textbook.

School of Business and Tourism Extension Policy

It is VERY important that YOU make yourself aware of the School’s Extension Policy and Special Consideration Policy. This is covered under the Assessment Policy and Procedures Tab on the MySCU learning site.

Students wanting an extension MUST make a request at least 24 hours before the assessment item is due and the request must be received in writing via email to [email protected]

Extensions requested within 24 hours of the submission date or following the submission deadline WILL NOT be granted (unless supported by a doctor’s certificate or where there are exceptional circumstances – this will be at unit assessor’s discretion and will be considered on a case by case basis). Extensions will be given for a maximum of 48 hours (longer extensions supported by a doctor’s certificate or exceptional circumstances will be considered on a case by case basis).

A penalty of 5% of the total available marks will accrue for each 24 hour period that an assessment item is submitted late. Therefore an assessment item worth 25 marks will have 1.25 marks deducted for every 24 hour period.

Students who fail to submit their assignments according to the correct guidelines provided above will be deemed to have not submitted their assessment item and a penalty will be applied until the correct submission guidelines are followed.

Extensions can be sought by emailing [email protected] When emailing it is essential to put ECO10250 in the subject area of your email otherwise it may be deleted as SPAM.

Re-submissions and re-sits

In this unit there are no provisions for re-submitting assignments.  If you have failed the unit after completing all three assessment items, there is an opportunity to re-sit the exam. The following conditions apply in this case:

• The ability to re-sit the exam will only be open to you if you have submitted ALL assessment items and sat he original exam.
• For any student who takes up this option a pass will be the highest result achievable.

Assignment 1- ECO10250 Questions

Due:                         11pm Monday, 17 August 2020 (Week 7)

Weighting:               25%

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 diagrams wherever possible and relevant. Always provide a brief explanation of each diagram, including how it relates to your overall answer.

Question 1

1. The following is a set of hypothetical production possibilities for a nation.

 

Combination	Computers	Cars
A	0	450
B	100	420
C	250	330
D	380	270
E	510	150
F	550	0

 

1. Plot the production possibility for the nation.
2. What is the opportunity cost of the first 100 computers produced?

• What would be happening if this nation is only producing combinations of 200 computers and 300 cars?

1. Show what would happen to the production possibility frontier if this nation introduced an improved new technology that allowed it to double its production of cars. The productivity of computers is unchanged.
2. Explain how the production possibilities frontier reflects the law of increasing opportunity costs.

       Parts i to v are worth 1 mark each.

1. Suppose that a Council is considering lowering the fees charged for parking in the CBD but not near the Council’s beaches for two reasons: a) to substantially raise its revenue from parking fees in the popular CBD area; and b) to discourage people from using the limited amount of parking near the Council beaches. Are these two objectives mutually consistent? Explain why or why not. Describe any assumptions you may need to make in order to answer this question.            

       (5 marks)

Question 2

1. In February 2020 it was reported that Australia’s solar power capacity could almost double in a year.
2. i) Use demand and supply curves of solar power to show this doubling of capacity. (2 marks)
3. ii) Use demand and supply curves of solar power to show what is likely to happen to demand for solar power over time in response to the capacity increases. (2 marks)

iii)   Use demand and supply curves of solar power and coal-fired power separately to show what is likely to happen to demand and supply of solar power if the government introduces a tax on coal-fired power. (4 marks)

1. In an attempt to support the solar-powered motor vehicle industry the government decides to set a minimum price for solar-powered vehicles. Do you think this is a good idea? Explain your decision with the aid of a diagram. (2 marks)

Question 3

1. The following information shows price ($) and quantity demanded (thousands per week) for entrance fees for a local attraction:

Price	0	1	2	3	4	5	6	7	8	9	10
Demand	10	9	8	7	6	5	4	3	2	1	0

 

1. Calculate the elasticity of demand at each price level change using the midpoint method.
2. Describe how the elasticity of demand changes with respect to price.

• Calculate the change in revenue for each price change.

1. Are the changes in revenue from part iii) consistent with the values of elasticity of demand that you calculated in part i)?

Parts i) to iv) are worth 1.5 marks each. 

1. Your minister for housing wants to increase the number of privately owned low – rental housing units available by 7 percent.
2. If the elasticity of supply of this type of housing has been estimated to be equal to 0.3 over the relevant period, how much is the percentage increase in rent required? (2 marks)
3. If the rent for these units is currently $70 a week what is the increase in rent required?  (2 marks)

Question 4

4a.

1. Fill in the columns above (3 marks)
2. At what point do diminishing returns set in? Explain your answer. (1 mark)

4b.   Assume that you have taken 12 months’ leave without pay from your full-time job as a dressmaker and set up a business ironing and repairing clothes. You have taken out a 12-month lease on a small shopfront in a suburban shopping centre. You have bought all the equipment you need for your business and arranged the fit-out of your premises to accommodate your work requirements. You have paid for these set-up costs out of your previous savings. You will not be able to buy any more equipment during the next 12 months. For the year, your total explicit costs are $25 500 and your implicit costs are $45 000.

1. Give some examples of your explicit costs.
2. Give some examples of your implicit costs.

• In your short-run period, how would the law of diminishing returns be likely to apply if the business was doing so well that you started taking on extra staff members?

1. If your total revenue is $80 000, what is your economic profit?      

Parts i) to iv) are worth 1.5 marks each.

Question 5

1. Do you think that the Australian Banking industry is closer to a Monopoly or Perfect Competition market structure? Give reasons for your answer and explain with the aid of a diagram the difference between the two market structures. Also explain which market structure serves the public better? (4 marks)

1. The Australian government is considering different methods for pricing carbon emissions.
2. i) What is the general rationale behind introducing a price for carbon emissions? (1 mark)
3. ii) Explain three methods for addressing the external cost of carbon emissions. (1.5 marks)

iii)   Demonstrate graphically carbon tax pricing to address the external cost of carbon emissions.   (1.5 marks)

iv)                    Discuss who you think would carry the cost of a carbon tax for elastic vs inelastic goods and services.   (2 mark)