Reference no: EM132435169
ECO100 - Introduction to Economics - Kings Own Institute
Assessment - Problem-solving exercises and short report writing
Purpose: This assessment is designed to allow students to demonstrate their understanding of fundamental economic principles and tools and apply them to the solution of problems in business, government and individual behaviour.
Topic: Problem-solving exercises and short report writing in Economics
Task Details:
Question 1
|
Price
(dollars per box)
|
Quantity demanded
(boxes per week)
|
Quantity supplied
(boxes per week)
|
|
6
|
500
|
4000
|
|
5
|
1000
|
3500
|
|
4
|
1500
|
3000
|
|
3
|
2000
|
2500
|
|
2
|
2500
|
2000
|
|
1
|
3000
|
800
|
The table sets out the demand and supply schedules for banana.
a. Draw a graph of the market for banana. What are the equilibrium price and quantity? Explain why.
b. If the price of banana was S1.50 a box. What would be the situation in the banana market (shortage or surplus)? Explain why and how the price and quantity would adjust.
c. Suppose a cyclone destroyed some banana farms in QLD and the quantity of banana supplied decreased by 500 boxes a week at each price. Explain what would happen to the market supply and demand and how would the equilibrium price and quantity adjust? Illustrate the changes on your graph.
d. Suppose a cyclone decreased banana supply by 500 boxes a week at each price. But at the same time the demand for banana increased by 500 boxes a week at each price. Explain what would happen to the market equilibrium price and quantity? Illustrate the changes on your graph.
Question 2
As part of his USA first policy, President Trump has imposed: (1) a price floor on wheat to support US Farmers' income; (2) a tariff on of tyres imported from China.
a. On a demand and supply diagram, show and explain whether the price floor in the US creates a shortage or a surplus in the market for wheat. Assume that the US does not trade wheat internationally.
b. Show on a demand and supply diagram and explain how the price floor in the US changes consumer surplus, producer surplus, and deadweight loss in the domestic wheat market.
c. Show on a demand and supply diagram and explain the impact of the tariff on (i) the quantity of tyres produced and demanded in the US, and (ii) economic surplus in the US. Clearly identify the winners and losers.
d. Are the policies (price floor and tariff) efficient and fair? Apply the fair results and fair rules notions of fairness in your discussion.
e. Recommend to President Trump whether the two policies (price floor and tariff) should be maintained or abandoned.
Question 3
The Australian Cycling Promotion Foundation (ACPF), Australia's peak bicycle promotion group says it expects the proportion of Australians regularly riding bicycles to increase from 33% to 66% future. The ACPF has hired you to write a persuasive economic report to support in the near government to provide more incentives to encourage cycling as a means of transport as ree.uest to thei good health. Your report should include a discussion of the following:
(i) the cross-elasticity of arerna..n between bicycle and motor vehicle; (H) the income elasticity of demand for bicycles; and and .maintra. maintenance demand
(iii) factors ocher than the price of petrol that might have Influenced and could influence demand for bicycles. illustrate your report with demand and supply diagrams, where appropriate. [Word limit for Question 3 only: 600 words)