Calculate the consumer surplus and producer surplus

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Reference no: EM131591167 , Length: word count:2000

Assignment 1

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 graphs wherever possible. Always provide a brief explanation of each graph, including how it relates to your overall answer/argument.

Question 1

a. Explain why a production possibility curve is usually bowed outward rather than being a straight line.

b. Jane has been unemployed for nearly a year but finds a high-paying job with an international hotel firm. Does this mean that Jane will no longer experience the problem of ‘scarcity'? Explain the reasons for your answer.

c. Every country has an economic system that has been established to address the problem of scarcity. Describe the economic system of a country other than Australia. Justify your assessment of the system by considering the major factors that determine an economic system within a country (300 words maximum).

Question 2

a. The table below shows the demand and supply for ice creams.

Price of an ice cream ($)

Quantity demanded ('000)

Quantity supplied ('000)

0.00

19

0

0.50

16

0

1.00

13

1

1.50

10

4

2.00

7

7

2.50

4

10

3.00

1

13

i. Graph the following demand and supply schedules.

ii. What is the equilibrium price and quantity in this market for ice creams?

iii. Calculate the consumer surplus and producer surplus at the equilibrium in this market.

iv. Assume that the demand schedule for ice creams outlined above is for summer. What do you think will happen to equilibrium price and quantity for ice creams during winter? Explain the reason for your answer.

v. What do you think will happen to consumer and producer surplus as a consequence of the change in equilibrium price and quantity for ice creams during winter? Explain the reason for your answer.

Question 3

The government has decided that the free-market price for milk is too low.

i. In an attempt to help dairy farmers increase their income the government imposes a price floor in the milk market. Use demand and supply diagrams to illustrate the impact of this policy on the price of milk and the quantity sold as well as the state of the market.

ii. Can dairy farmers be assured of an increased income? Explain your answer.

iii. Would it be a good decision for the government to purchase all the surplus product? Explain your answer.

Question 4

a. Complete the table below. In your calculations use the midpoint method to calculate the price elasticities.

Price ($)

Quantity demanded

Total revenue

($)

Percent change in price

Percentage change in quantity demanded

Elasticity

Assessment of Elasticity

2

10

20

 

 

 

 

 

 

 

 

 

 

 

3

8

24

 

 

 

 

 

 

 

 

 

 

 

4

6

24

 

 

 

 

 

 

 

 

 

 

 

5

4

20

 

 

 

 

b. During a holiday period do you think the price elasticity of demand for airline tickets would be the same as in the off-season or would it become more elastic or more inelastic? Explain your answer.

Question 5

a) Complete the cost schedule below for a gardening company:

Quantity of gardens

Total Fixed Cost (TFC)

 

 

$

Total Variable Cost (TVC)

$

Total Cost (TC)

 

 

$

Marginal Cost (MC)

 

 

$

Average fixed cost

(AFC)

$

Average variable cost

(AVC)

$

Average total cost

(ATC)

$

0

10

 

10

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

34

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

94

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

122

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

154

 

 

 

 

b. If the firm is operating in a perfect market where the price for gardening at one house is $20 dollars, how many gardens should this company do in order to maximise profit? Explain your answer.

d. Graph the average variable cost, average total cost and marginal cost and marginal revenue curves.

Assignment 2

Requirement:

In August 2016, Glenn Stevens, the then Governor of the Reserve Bank of Australia, presented an overview of the world and Australian economies (see http://www.rba.gov.au/speeches/2016/sp-gov-2016-08-10.html). For Assignment 2 you are required to firstly read this speech and to then prepare a report on the current (i.e. September 2017) state of the Australian economy and compare its performance with state of the economy in August 2016. You could use the RBA report to guide your thinking on how to prepare your report. In completing your report it will be necessary to examine the latest figures for the following four economic indicators - economic growth (GDP), unemployment, inflation and trade (including the terms of trade, the current account, net foreign debt and the value of the Australian dollar). In examining the performance of the Australian economy it will be useful to outline any expected target values that exist for the economic indicators. Finally, given your analysis, you are asked to highlight three major issues facing the Australian economy over the next 12 months and why you perceive these as of concern.

Presentation of report
The report should be between 1500 and 2000 words. This word limit does not include the abstract, tables, graphs and reference list.
The report should be word processed using Times New Roman font size 12 with 1.5 line spacing.
Structure of report
Your report must include:
- an appropriate title
- an abstract (sometimes called an executive summary) summarising the report
- an introduction in which you briefly explain what you are going to address in the report and why
- the body of the essay broken into sections with appropriate section headings
- a brief conclusion that should summarise your analysis
- appropriate in-text referencing and a reference list at the end of the report.

Although the requirements for presentation and structure may appear pedantic, they are not. In the business world you may often find yourself involved in writing a report - perhaps even for multilateral and government organisations such as the IMF or OECD. We suggest that you devote some time to developing this skill. Your future career can only be enhanced by your ability to communicate effectively in writing.

Your report will be marked against the following criteria:
- Abstract
- Introduction
- The body of the report providing:
o An appropriate description and discussion of the current state of the Australian economy as reflected by the four economic indicators - economic growth, unemployment, inflation and trade in Australia and the economy in 2017.
o A succinct description of three major issues facing the Australian economy over the next 12 months.
- Conclusion
- Evidence in the report of a depth of research
- Accuracy in referencing (Harvard Style)
- Presentation, grammar, structure, etc.

Length: 1500 - 2000 words

Reference no: EM131591167

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Reviews

len1591167

8/4/2017 9:59:15 PM

The final examination is scheduled for the end of the study period. Students will be fully advised during the study period as to when the exam will be held and the format it will take. The exam will be closed book. Students will be able to take in a silent non-programmable calculator.

len1591167

8/4/2017 9:58:52 PM

A penalty of 10% of the total available marks will accrue for each 24 hour period that an assessment item is submitted late. Therefore an assessment item worth 20 marks will have 2 marks deducted for every 24 hour period and at the end of 10 days (including weekends) will receive 0 marks. 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.

len1591167

8/4/2017 9:58:43 PM

It is also important to use Harvard-style referencing for ALL material used in your work. 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. 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 by the unit assessor or designated academic. Extensions 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).

len1591167

8/4/2017 9:58:06 PM

Assignment due dates and the examination period provided here apply to the Australian study period. These may be varied for students studying elsewhere, please confirm dates with your local tutor.The final examination will be based on topics covered throughout the whole study period. It will consist of 20 multiple choice questions and three written-answer questions. More details about the examination will be provided at a later date.You will be required to gather information for your assignments and 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.

len1591167

8/4/2017 9:57:44 PM

Word Count - Around 2000 Quality Words + Calculations +Graphs etc. High Quality Work Needed Comments: Only Assignment 1 needs to be done. The assessment for this unit consists of two assignments and a final examination. The assessment is designed to test your understanding of issues and principles raised in the topics being studied. The first assignment consists of five questions based on topics covered in the early part of this unit. The second assignment is a report on the Australian economy. The purpose of these assignments is to give you the opportunity to demonstrate the skills you have acquired in this unit. You will need to start gathering information for the second assignment almost immediately the session starts.

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