代写 MAE101 – Economic Principles

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Individual Assignment

Due date: Monday, 2 May 2016

Worth 25% of your overall assessment

1 Instructions:

• An electronic copy 1 must be submitted in CloudDeakin by 11.59pm on the due

date. Penalties 2 apply to late submissions unless prior arrangements have been

made by the Unit Chair.

• You must attach an assignment attachment sheet 3 , which includes a plagiarism

declaration: see the unit guide for details. Please note that digital signature of

the plagiarism declaration IS acceptable.

• Digital literacy is one of the Deakin’s Graduate Learning outcomes and among

the Unit Learning Outcomes of MAE101. It requires the students to be capa-

ble of using modern technologies to find, use and disseminate information. To

achieve this goal, it is required that ALL contents of your assignment should be

digitally produced, including explanations, diagrams, and mathematical deriva-

1 All assignments are to be submitted online in the assignment dropbox in CloudDeakin. They are counted as

“ontime”ifsubmittedby11:59pmAESTorAEDSTontheduedate.Ifnecessary,youcanlookupyourlocal

time at http://www.whitepages.com.au/wp/helpfulInfo.do?category=info&item=worldTime.

2 See the unit guide for details.

3 The attachment sheet is available under the Assignment folder in CloudDeakin.

tions, etc 4 .

To receive full marks you must show clear development and expression of economic

ideas in clear paragraphs in addition to the correct answers. You may use dot-points or out-

lines to develop your thinking, but then re-write them into proper sentences and paragraphs.

Please use 12pt sized font and double-space format. You must cite all ideas that are not

your own. You should use the Harvard (name-date) referencing style, to cite any source

you use – perhaps to confirm your results with the text. It means that, rather than placing a

reference in a footnote, you should provide reference of the work inside the text with the

name of the author and the date of publication of the work cited. Example:

Far from being the inventor of the idea of perfect competition, Adam Smith

was in fact among the last representative of economists who saw competition

as a dynamic process of rivalry (McNulty 1967).

This means you are citing a 1967 article authored by someone called McNulty as the source

of the idea in the sentence. You would then list that article in a list of references at the end

of your paper:

• McNulty, Paul J. 1967. “A Note on the History of Perfect Competition,” Journal of

Political Economy 75(4): 395-399 (August)

There are many ways to run the details of a name-date style. You should pick up only

one style and use it consistently. Please see the Harvard webpage put out by Student Life

(http://www.deakin.edu.au/students/study-support/referencing/harvard).Do

not just quote chunks of the text – you must express your answer in your own words.

4 Instructions and video clips on how to use computers to generate graphs and mathematical expressions can

be found on CloudDeakin unit website in the assessment folder.

You may study with other students, discuss the assignments with whomever you wish

and even outline answers with others. However, you must write this assignment on your

own. Software will check each assignment for plagiarism and collusion, which are ex-

plained in our Unit Guide. Severe disciplinary measures could be taken as explained in the

Unit Guide. We realize that some sentences will occur in different students’ work because

there are few ways to say them, e.g., “Price decreased from P 1 to P 2 .” However there should

be few such matches between any two assignments, and even the process of resolving the

case of accidentally matching someone else’s work can be time-consuming and upsetting.

So, please do your own work. It is preparation for the exam.

You must draw the diagrams by computer. A short video clip on how to draw graphs by

computerinMSWordisavailableundertheassignmentfolderinCloudDeakin.Pleasekeep

in mind that your future employers will expect you to be able to work on computers and

that hand-drawn diagrams are usually unacceptable in professional business documents.

2 Questions:

1. Opportunity cost is a key concept in Economics. The textbook defines the opportu-

nity cost as the best alternative that must be given up to obtain some item. Use the

opportunity cost concept to develop response to the following questions:

(a) Suppose you are a music fan. Lucky enough, you won a free ticket to see a local

rock-band concert tonight (with no resale value). There are two other concerts

on the same night: one for Taylor Swift and the other for Katy Perry. These two

concerts are the only other activities you are considering. The ticket prices for

Taylor Swift and Katy Perry’s concerts are $90 and $85, respectively. And on

any given day you would be willing to pay up to $110 to see Taylor Swift or

$100 to see Katy Perry perform. In other words, if Taylor Swift tickets sold for

more than $110, you would pass on the opportunity to see her even if you have

nothing else to do. Similarly, you will pass on the opportunity to see Katy Perry

if her concert costs you more than $100. There is no other cost of seeing any

of these three concerts. According to the information provided, what is your

opportunity cost of attending the local rock-band concert? Briefly explain your

answer.

(b) Sally owns a local souvenir store. One of the most popular items in her shop

is the opal bracelet she made. An opal bracelet costs Sally $28 on average, and

is sold for $45. She unfortunately accepted a traveller’s cheque of $100 from a

tourist who purchased two bracelets and gave him $10 change. Sally then gave

the cheque to her landlord but it bounced so she had to get $100 cash from her

bank account to pay her rent. The ongoing interest rate is 3.5%.

i. How much money has Sally lost in this incident? Briefly explain your an-

swer.

ii. Would your answer to the last question change if the opportunity cost is

considered? If so, what is the opportunity cost of this incident? Briefly

explain your answer.

iii. Sally learns from this incident and decides to never accept any traveller’s

cheques in the future. Is it a wise decision? Briefly explain your answer.

2. During 2010–2011, a series of floods hit Australia, primarily in the eastern coast

areas including Queensland and Victoria. At least 70 towns and over 200,000 people

were directly affected. The estimated damage in Australia’s GDP is about $30 billion

(ABC News Online, 18 January 2011). The floods also took a toll on the potato

代写 MAE101 – Economic Principles

industry. As a consequence, the potato market has received a lot of attention.

(a) According to a study on the Australian potato market, at the price of $2.99 per

kilogram, a regular household consumes about 7.6 kilograms of potatoes per

month. The consumption of potatoes drops to 6.5 kilograms per month when

the price is at $4.99 per kilogram.

i. Based on this information, use the mid-point method to compute the price

elasticity of demand for potatoes in a regular Australian household.

ii. There are many ways to categorize the goods in the market. For example,

there are normal goods and inferior goods, regular goods and Giffen goods,

necessities and luxuries, etc. According to your answer in the last question,

what type(s) of good does the potato belong to?

iii. Some scholars argue that the estimate of the elasticity calculated in (i)

might be unreliable. Briefly explain why.

(b) Since potato is an important food for Australians, soaring potato prices could

substantially affect the living standards of many households in Australia. In or-

der to avoid the disastrous consequences, the Australian government can adopt

some price control schemes. Suppose you have been provided with the follow-

ing information regarding the demand and supply of potatoes:

Q d = 9−0.5P

Q s = −0.5+1.4P

where Q d , Q s and P are the quantity demanded (in kilograms), the quantity

supplied (in kilograms) and the market price (in dollars), respectively.

i. Calculate the equilibrium price and quantity of potatoes.

ii. Suppose the Australian government decides to impose a price ceiling of

$4.00 per kilogram on potatoes, what will be the new market price and

quantity?

iii. What will happen to the market price and quantity if the price ceiling is set

at $6.00 per kilogram on potatoes?

use standard demand and supply analysis to answer the following questions:

i. If the Australian government subsidizes consumers and gives one dollar

for every kilogram of potatoes purchased, what are the expected effects of

such a scheme on the equilibrium price and quantity of potatoes? (See Page

137-140 of Gans et al., 2012, for a detailed discussion of subsidies).

ii. If the Australian government subsidizes the potato-growers and gives one

dollar for every kilogram of potatoes produced, what are the expected ef-

fects of such a scheme on the equilibrium price and quantity of potatoes?

iii. Instead of subsidizing only consumers or growers, if the Australian govern-

ment decides to evenly split the subsidy to both parties, i.e., give 50 cents

for every kilogram of potatoes purchased by the consumers, and another 50

cents for every kilogram of potatoes produced by the growers, what are the

expected effects of such a scheme on the equilibrium price and quantity of

potatoes?

(d) Suppose an economist observes the following monthly data on the market price

and quantity of potatoes purchased in Geelong during the year 2015:

Month Jan. Feb. Mar. Apr. May Jun.

Price ($ per kilo) 2.99 2.52 2.90 3.15 3.69 3.44

Quantity (tons) 342 357 345 321 300 334

Month Jul. Aug. Sep. Oct. Nov. Dec.

Price($ per kilo) 3.44 4.93 4.84 4.21 1.87 1.51

Quantity (tons) 346 208 233 289 427 475

Based on the data, the economist plots the observations on a graph below with

quantity andprice on the horizontal and vertical axis respectively. He claims

this graph approximates the demand curve (the solid straight line) for potatoes

in Geelong for 2015. Do you agree with the economist’s claim? Explain your

answer in details.

3. A survey reported in 2009 reveals the following production conditions for Cyprus,

Slovenia and Slovakia. An average Cypriot worker could produce either 5 units of

wine or 12 units of rye in a year. An average Slovenian worker could make 7 unit of

wine or 5 units of rye annually. In Slovakia, a typical worker could make 3 units of

wine or 3 units of rye in a year.

(a) Draw the Production Possibilities Frontiers (PPFs) for Cyprus, Slovenia, and

Slovakia in terms of units of wine and rye in year 2009, placing the number of

wine units on the vertical axis and the number of rye units on the horizontal

axis. (Hint: You need information about these three countries to transform the

individual productivity into the national productivity.)

(b) After being accepted as members of the European Union (EU), Cyprus, Slove-

nia, and Slovakia have joined a single market through a standardised system of

laws that apply in all EU member states. Specifically, all three countries agreed

to allow the free movement of people, goods, services, and capital. In other

words, these three countries have become an economic community, with their

individual markets for factors of production been integrated into a united one.

Draw the community’s PPF, placing the number of wine units on the vertical

axis and the number of rye units on the horizontal axis. Show your workings.

pations, such as accountants, cooks, and hairdressers. This policy has been crit-

icised by many politicians and scholars for being discriminating and inefficient.

Justify this policy by using the tool of PPF and the example given in (a) and (b).

Can you develop some policy proposals to promote the fairness and efficiency

of this policy? Why do you think they will work better than the current policy?

3 Requirements:

• Make sure that you are using correct referencing.

• Read through your work prior to submission, checking your spelling and grammar.

• All content is to be electronically generated.

• No more than 2000 words in total excluding the tables, diagrams, and references.

References

Gans, J., S. King, M. Byford and N. G. Mankiw (2015): “Principles of microeconomics,”

6th editon, Cengage Learning Australia Pty Limited.

-End of Assignment-

代写 MAE101 – Economic Principles