### Recent Question/Assignment

Principles of Economics: ECON11026 Term 2-2017
Assessment Item 2 - Short Answer Questions
Due date: 11th September 2017 Monday of Week 9 ASSESSMENT
Weighting: 30 % (2 marks for in-text referencing, presentation,
clarity of explanation and evidence of reference list
and 28 marks for the answers to the four questions)
Length: Approximately 1500-2000 words (Approx. 400-500 words for each question, excluding graphs, tables and the reference list)
It is a progressive assignment based on topics studied in weeks 5-8, covering chapters 6, 7, 9, & 10.
Please answer one question per week so you will not
need to ask for an extension.
2
Objectives
Assessment Item 2 relates to course learning outcomes as listed in the unit profile.
Question 1: Refer to Chapter 6- Imperfect Competition
(a) Define and explain with an example why firms resort to product differentiation under monopolistic and oligopolistic market structures. (1.5 marks each= 3 marks)
(b) In Table1 below, an oligopolistic firm faces two demand schedules. The current price is given as \$185. Study the table and answer the following questions:
(i) What would the demand curve be under the kinked demand curve hypothesis? Explain. (1 mark)
(ii) Plot the marginal revenue curve corresponding to the kinked demand curve and explain. (1 mark)
(iii) Given that Marginal Cost is \$150 at every level of output, copy the table and calculate Marginal Revenue. Determine the profit- maximising level of output and plot it on the graph. (2 marks)
Table-1
Competitors Quantity Demanded Price Competitors follow: Quantity Demanded Total Revenue Column 1x2 Marginal Revenue (MR) Marginal
(\$) Cost
(MC)
20 200 35 4000
30 195 40 5850
40 190 45 7600
50 185 50 9250
60 180 55 10,800
70 175 60 12,250
Total = 7 marks
Question 2: Refer to Chapter 7- Market Failure and Government Policy
(a) Define, illustrate, and explain with examples market failure in the context of the external costs of production (MSC MC) of coal fired power station and the external cost of consumption (MSB MB) of alcohol to the society. (2 marks each= 4 marks)
(b) Many economists have argued that a form of `congestion tax ought to be imposed on the motorists who use their cars on busy roads, to take account of the external costs they impose on other road users and pedestrians. List and compare the advantages and disadvantages of the following three measures to reduce congestion in Australia: (1 mark each= 3 marks)
(i) An increase in the rate of excise duty on petrol.
(ii) The use of bus and cycle lanes at peak times.
(iii) Using a system like Singapore (see box 7.2) where charges are deducted from a pre-paid smart card inserted into a device in the car, and charges vary according to the time of day and /or the level of congestion.
Total = 7 marks
Question 3: Refer to Chapter 9- Introduction to Macroeconomics
(a) Explain in terms of the Australian circular flow of income if the following are net injections, net withdrawals or neither. If there is uncertainty, explain your assumptions.
(i) Firms spend money on research and development. (1 mark)
(ii) The public invests more money in credit unions. (1 mark)
(iii) The government runs a budget deficit and finances it by printing more money. (1 mark)
(iv) Australian investors earn higher dividends on overseas investments. (1 mark)
(b) Table 2 below gives the national accounts data for a hypothetical economy called Disney Island for a given year. Study the data from the table and calculate the following:
(i) Gross Domestic Product (GDP= C+I+G+NX) using the expenditure approach (1 mark)
(ii) Withdrawals (S+T+M) (1 mark)
(iii) Injections (I+G+X) (1 mark)
Table 2
National Accounts Data 2016 Amount (\$) Billion
Gross Private Domestic Investment 35,000
Government Consumption Expenditure 15,000
Government Investment Expenditure 25,000
Household Private Consumption Expenditure 60,000
Income Taxes 15,000
Import 20,000
Exports 15,000
Savings 6000
Total = 7 marks
Question 4: Refer to Chapter 10- The Determination of GDP
(a) Define, illustrate and distinguish between the following:
(i) Inflationary gap (2 marks)
(ii) Deflationary gap (2 marks)
(b) Illustrate and explain what effect the following will have on the expenditure line:
(i) An increase in the proportion of peoples income that is saved. (1.5 marks)
(ii) Arise in Australian exports. (1.5 marks)
Total = 7 marks
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Assessment criteria for Assessment Item 2: Use the DADA acronym when structuring your answers to all questions in economics. (Definitions: define the key terms; Assumptions: list or make assumptions as required; Diagrams: draw relevant graphs/tables and explain; and original Analysis: apply the theory to real life economic examples and explain).
Tips for completing Assessment #2
(i) Please read the assigned chapters and work on the assignment questions progressively each week. This approach will prevent you from asking for extensions and allow you to submit all assessment tasks on time to pass the course.
(ii) Concepts and key terms must be defined accurately and completely.
(iii) The assumptions upon which the analysis is based must be stated at the outset.
(iv) Diagrams must be drawn properly, correctly labelled and the relations they depict explained on the diagram and in the accompanying text of your answer.
(v) When a question has more than one part, so too should the answer. Ensure complete coverage in the analysis section of your answer.
(vi) Students should reference a minimum of two (2) to three (3) textbooks to answer these theory based questions.
(vii) Remember, an extension is not a gift; it is a burden.
(viii) Plagiarism is a real concern; therefore, please remember to use in-text referencing and provide a reference list using the APA Referencing Style. Do not give your assignment to anyone or copy from other students.
ECON 11026: Assignment-2-2017 Marking Sheet
Student Name: Student/Number:
Question Econ A-2 Marks Out of Total Marks Comments
Q1 a 3 (1.5 marks each)
b (i) 1
b (ii) 1
b (iii) 2
Q2 a 2
a 2
b (i) 1
b (ii) 1
b (iii) 1
Q3 a (i) 1
a (ii) 1
a (iii) 1
a (iv) 1
b (i) 1
b (ii) 1
b (iii) 1
Q4 a (i) 2
a (ii) 2
b (i) 1.5
b (ii) 1.5
Referencing 1
Presentation 1
Total marks Total marks out of 30 30