Recent Question/Assignment

ECONOMICS FOR MANAGERS
MPE781/981
T2.2014 Assignment

Due date: Monday, 11:59pm, September 8, 2014.

Nature: Individual assignment.

Assignment Overview: This assignment is partly based on the attached article, “Australian Housing Market Review,” by Arnhem Investment Management,
November 2012. Please read this article carefully before attempting the questions. You will be required to demonstrate your understanding of economic concepts taught in the unit and relate them to the cases in the article.

Learning Objectives: This assignment is designed to encourage you to think about the applications of economic concepts learned in this unit to real world scenarios.
Assessment: Based on the attached Rubric, your assignment will be graded on your use of appropriate economic theory and concepts, clarity of exposition and overall quality of your answers. Your answers should follow “Guide to assignment writing and referencing”, available at this link: http://www.deakin.edu.au/current- students/assets/resources/study-support/study-skills/assign- ref.pdf.
Questions:
Answer all questions. Limit the total word count of your assignment to less than 3,000 words. Depth is encouraged over breadth: that is, it is more important that you demonstrate you understand a concept fully, rather than talk about 3 related concepts only cursorily. You are encouraged to provide necessary graphs, figures and data wherever possible. Please be careful in implementing referencing styles.
Total mark:
40 marks. Allocation as indicated next to the question. Your score on this assignment contributes towards 40% of your final score for this unit.
Submission: This assignment must be submitted electronically on D2L (DSO) Dropbox area by all students by 11:59pm on the due date. No hard copy is required. Print your name and student ID clearly on the first page of your answers. Please check the Academic Honesty and Misconduct section in the Unit Guide. Submitting your answers automatically implies that you have read and accepted the Plagiarism and Collusion Declaration, and that the submitted answers are entirely your own work.

Question 1: (8 marks)

In your own words, summarize the article, “Australian Housing Market Review,” by Arnhem Investment Management, November 2012. In particular, what are the main messages of the article?

Question 2: (8 marks)

Using appropriate diagrams, figures and data to answer: Are the Melbourne’s housing prices overvalued? Why or why not?

Question 3: (8 marks)

Suppose that the Melbourne’s housing market is perfectly competitive (i.e., many real estate developers). The city government decides to levy a buyer’s tax (specific tax) on housing purchases. Using appropriate diagrams to answer:

(a). Examine the impacts of this buyer’s tax on the equilibrium housing prices, consumer surplus, producer surplus, and total surplus (or social welfare).
(b). Can an increase in the buyer’s tax raise social welfare?
(c). Can an increase in the buyer’s tax raise city government’s revenue?

Question 4: (8 marks)

Suppose that city government decides to develop a new housing area (i.e., the city government is like a monopolist). Using appropriate diagrams to answer:

(a) If the city government’s objective is to maximize profits, what would be the housing price set in this new area?
(b) If the city government’s objective is to maximize revenue, what would be the housing price set in this new area? (c) If the city government’s objective is to maximize welfare, what would be the housing price set in this new area?

Question 5: (8 marks)

Find at least three countries or economies that have housing policies or measures to stabilize the housing markets.
Provide your views or suggestions on the best measure to stabilize the housing markets that could be considered or used in Melbourne.

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