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ECO501/ECO511 Assignment 2




Question;Length:no more than 2500 words(including graphs;tables etc).Font size: 12, Margins: 2.5 cm on all sides;Please submit via Reception and Turnitin.;[This Assessment item;covers in full (or partially) the Learning Objectives 1, 3, 4, 5 and 6].;PART A;Activity;1. [30;marks];You;are given the following information in relation to the market demand and supply;of Ford cars;Ford;Cars: Market Demand and Supply;Price ($);Quantity demanded/sold;Quantity supplied;Price elasticity of demand;Total Revenue;20,000;40,000;10,000;25,000;35,000;15,000;30,000;30,000;20,000;35,000;25,000;25,000;40,000;20,000;30,000;45,000;15,000;35,000;50,000;10,000;40,000;(i);Draw the market Demand and Supply curves (on the same graph);for Ford. [5 marks];(ii);What is the market equilibrium price and quantity? [5;marks];(iii);Explain what you will;observe in the market if the Ford car price is set at a higher than equilibrium;price. [5 mark];(iv). Suppose;you are managing director of Ford Australia, and you are wondering whether or;not to cut the price of Ford cars to increase your total revenue from;sales. Explain how your knowledge of;elasticity of demand can help you make this decision. Complete the last two;columns of the above table and also draw a graph to explain your answer. [8 marks];(v).;Suppose car industry is very competitive and Ford has been losing its competitiveness;in;the car market. Suppose that the government is providing;substantial financial support to;Ford manufacturers with the;view that it will improve Ford?s competitiveness. Evaluate the;merits and demerits of this;government policy measure. [7 marks];Marking Criteria;To obtain full marks, you need to demonstrate;clear understanding of the subject content covered/related to this activity.;You need to explain where relevant how the knowledge can be used to make;price/revenue decision. You also need to demonstrate your ability to use your;content knowledge to make decisions in the real world scenarios. Use of correct, complete and relevant graphs is;part of the skills/abilities expected.;Practice work for the above activity (1);?;Study Guide Topic 2, Self assessment questions 2, 3 and 4.;?;Textbook: Chapter 3, REVIEW;QUIZES on p. 63.;?;Textbook: Study Plan;Problems & Applications No. 11, p.;76 and Additional Problem;Applications 21-27, pp. 77-78;?;Textbook: Pages 83-84;REVIEW QUIZES 2-3, p.86;Activity 2: [30;marks];(i). Explain the difference between accounting;profit and economic profit. Include discussion of the distinction between;explicit and implicit costs and how they relate to economic cost and;opportunity cost. [5;marks];(ii). Suppose;your aunt is thinking about opening a hardware store. She estimates that it;would;cost $ 500,000 per year to rent;the store and buy the stock. In addition, she would have to;quit her $ 510,000 per year job;as an accountant.;What is your aunt?s opportunity cost of running a;hardware store for a year? If your aunt;thought she could sell $ 510,000 worth of merchandise in a year, should she;open the store? Explain.;[5 marks];(iii). Compare and contrast the two market structures;Perfect Competition and Monopoly, in;line with main characteristics of them.;Comment of the Price and profit maximising output;level in the two structures. [5;marks];(iv). Which market structure is considered to;be more efficient? Justify your answer;[3;marks];(v). List down two closest real world examples for;each of these market structures.;[2 marks];(vi). Do you believe that;the government should intervene to control the monopoly power in the market. You need to argue for/justify your answer. [5 marks];(vii). In a free market;system, why does the government have to provide certain goods and services;using tax payers money? Is there any;justification? Explain providing examples.;[5 marks];Marking Criteria;To obtain full marks, you need to demonstrate;clear understanding of the subject content covered/related to this activity.;You also need to explain where relevant how the knowledge can be used to make;decisions in the real world. Make sure that you use correct, complete and;relevant graphs to explain your answers.;Any justifications need to be made based on the subject content;(theory/concepts) related to this subject.;Use of correct, complete and relevant graphs is part of the;skills/abilities expected.;Practice work for the above;activity (2);?;Study Guide Topic 1: Self assessment questions 1 and 2, Study Guide;Topic 4.1, Self assessment questions 1;?;Textbook: REVIEW QUIZEs 1-5;p.284, REVIEW QUIZES 1-3 p.307 and REVIEW QUIZES 1-3 p.311, Study Plan Problems;Applications 7-8, p. 327;?;Textbook: REVIEW QUIZEZs 1, 3, and 4, p.219, REVIEW QUIZEZs 1-4.;P.224, Study Plan Problems;Applications 6-10, p.235.;?;Textbook: REVIEW QUIZEZs 1;3, and 4, p.176, and REVIEW QUIZEZs 1;and 4. P.180, Additional Problems;Applications 17,p.191.;PART B [40;marks];Activity 3;Section I: [20 marks];(i). (a). What is gross domestic product (GDP) and;what is the use of it? [5;marks];(b). Comment on how well this measure;serves its intended purposes. [4;marks];Practice work for the above activity:* Textbook: REVIEW QUIZEs 1;and 2, p.400, REVIEW QUIZE 1, p.409, read pages. 407-408. Additional Problems and;Applications, 27-28, p.419;(ii).;(a). What is unemployment [2 marks];(b). Can a country achieve a 0%;unemployment rate, Explain [5;marks];Practice work for the above activity:* Textbook: REVIEW QUIZEs 1 ?;4, p.429, Study Plan Problems & Applications 1 ? 4.;(iii).;(a). What is inflation, and how it is calculated [4 marks]Practice work for the;above activity;* Textbook: REVIEW QUIZEs 3, Study Plan and Applications 12-16;p.440,Additional Problems and;Applications 33 and 34, p. 442.;Section II: Essay Question: [20 marks]Explain why inflation is a main concern;for an economy, and examine how well inflation in Australia has been managed by;the monetary authority over the last 10-15 years.;To do the above activity, you need to read relevant chapters in;your text book to get theoretical/conceptual understanding of the subject;matter and read outside the textbook/Study Guide to examine the Australian;case. These readings may include published research papers/articles, reports;reviews in the media and any other materials published with authority.;In borrowing/extracting the ideas from other sources, you must;properly acknowledge it. This means that you need to prepare a list of references;at the end of Essay question.;Marking Criteria;To obtain full marks, you need to demonstrate;clear understanding of the subject content covered/related to this activity.;You also need to explain where relevant how you can use content knowledge to;make decisions in the real world. Any justifications need to be made based on;the subject content (theory/concepts) related to this subject. Use of correct, complete and relevant graphs;is part of the skills/abilities expected.;To;obtain full marks in the assignment, you also need to adhere to the following;* use correct terminology;* stick to the word limit;* Follow the Presentation guidelines as referred to in the Subject Outline


Paper#57803 | Written in 18-Jul-2015

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