Essays on Economic Assignment Assignment

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PART CProposed weekly scheduleWeekWeek beginning datesModule/TopicChapterEvents and submissions107 July 2008Introduction to economic way of thinking1 & 2214 JulyBasics of market mechanisms: demand and supply analysis3 & 4321 JulyElasticity of demand and supply5 428 JulyProduction costs654 AugustPerfect competition7611 AugustMonopoly 8Vacation period725 AugustMonopolistic competition and oligopoly9Assessment item 1 due Tuesday 26thAugust 200881 SeptemberLabour market and microeconomic reforms1098 SeptemberMacroeconomic fundamentals: GDP and business cycles11 & 121015 SeptemberInflation and unemployment. A simple model of macro economy13 & 141122 SeptemberMonetary and fiscal systems15 (16 & 17)1229 SeptemberReview06 – 08 OctoberReview Period09 -24 OctoberExamination PeriodNote: A recess is held during term.

Please consult the CQU Handbook for specific dates and other information at: http: //handbook. cqu. edu. au AssessmentAssignment submissionFor Off-campus students, hard copy, signed assignments for this course may be submitted using the Division of Teaching and Learning Services assignment submission system. On-campus students should submit hard copy, signed assignments through their particular campus submission system. Policies and procedures for assessmentStudents must familiarise themselves with the following policies and procedures: Assessment and examination policy and proceduresUniversity Assessment of Coursework Policy http: //policy. cqu. edu. au Assignment preparation and presentationChapter 1 Guide for Studentshttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=492 Referencing styleDetailed information: Chapter 2 Guide for Studentshttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=492Assignment submissionChapter 1 Guide for Studentshttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=492Applying for extensionshttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=7 Assignment gradinghttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=7 Plagiarism policyhttp: //policy. cqu. edu. au/Policy/policy. jsp? policyid=198 Plagiarism detailed explanationChapter 2 Guide for Studentshttp: //fbi. cqu. edu. au/FCWViewer/view. do? page=492 Assessment details for ALL studentsAssessment item 1—assignmentDue date: Tuesday 26th August 2008ASSESSMENTWeighting: 40% Question 1 – 22 marksQuestion 2 – 22 marksQuestion 3 – 44 marksAn additional 12 marks are allocated for overall research (see assessment criteria below)).

Marks out of 100 will be scaled back to 40%. 1Length: 500 words each for questions 1 and 2; 3,000 words for question 3.ObjectivesThis assessment item relates to the course learning outcomes 1, 2 and 3 as listed in Part A. Question 1:(22 marks)Part a)The table below shows a production possibilities frontier (PPF) for two goods. ABCDECapital goods01234Consumption goods25 23 19 13 0Draw, using appropriate labels, a diagram showing the PPF.

Graph should be in the form of the first illustration at http: //en. wikipedia. org/wiki/Production_possibilities_frontier, with one axis representing Capital Goods and the other representing Consumption Goods. I’ve supplied a version in an Excel sheet. What is the cost of producing the third unit of capital goods? What is the cost of production of the fourth unit of capital goods? The third unit of capital goods costs 6 units of consumption goods (that is, production declines from 19 units to 13 units); the fourth unit of capital goods costs 13 units of consumption goods, as production declines from 13 units to 0 units. On the same diagram, draw the PPF as if there is a 50% decrease in supply of natural resources in the economy. At 50% resources (assuming that fractional units are possible): ABCDECapital goods01233.12Consumption goods12.5 10.5 6.5 0.50(Note that the marginal rate of transformation between capital goods and consumption goods is unchanged; so the first unit of capital goods still costs two units of consumer goods, and so on. )This set of points is on the Excel graph as well. Part b)Utilise the demand-supply market models (for each market below) to graphically illustrate and explain the following scenarios (in the short run).

Identify for each scenario what the effects on price and quantity are likely to be. Graphing: See first graph at http: //en. wikipedia. org/wiki/Supply_and_demand. The Wikipedia graph has a little arrow showing an increase in demand from D1 to D2; in all three of these cases, we’re talking about a decrease in demand, so that little arrow would be reversed. The market for cars if there is an increase in petrol prices. If we assume that only one kind of car exists, then it would follow that an increase in the price of petrol would cause a decrease in demand for cars – since consumers would drive less, and choose alternative means of transportation.

However, if we assume that more economical cars exist, a significant increase in the price of petrol could actually stimulate the total demand for new cars, since consumers would have a strong incentive to replace gas-guzzlers with more efficient models; this would be especially true where alternatives such as efficient mass transportation were unavailable or expensive. In the simpler case illustrated (of only one kind of car), we would see the demand curve shift downwards/leftwards, such that at any given price fewer cars would be sold. The market for margarine as the price of butter reduces. Since at least some consumers decide between margarine and butter based on their relative prices, a decrease in the price of butter would cause the demand curve for margarine to shift downwards/leftwards – since at any given margarine price, an increased number of consumers would buy butter instead, leading to consumption of less margarine. The market for computer monitors as the price of computers increases. Since monitors are typically bought together with new computers, and increased computer prices would reduce sales of new computers, the demand curve for monitors would shift downwards/leftwards. It is worth noting that for some computer upgrades – for example, random-access memory or hard disks – an increase in the price of computers might lead to an increase in demand for the upgrade (assuming the upgrade’s price had not changed), since an increased number of computer owners would choose to upgrade their existing computers rather than purchase new ones.

The same would not be true for monitors, since they do not contribute directly to a computer’s performance; buying a new monitor will not speed up your old computer.

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