Economic Foundations and Market Forces

Economic Foundations and Market Forces.

6 questions,

1

Written Assessment ECO10004 Economic Principles

Part A - Introduction

Due Date – See Canvas under the assessment tab

 

 

Please do not attach a coversheet to your assignment. Also,

do not include a copy of the questions in your assignment.

You can insert pictures in your document but they must be

low resolution pictures. If your file is larger than 1 to 2 MB

then convert your file to pdf and upload this into turnitin.

We strongly encourage you to work with your tutor and your

fellow students, however, you must submit your own work in

your words. If we find significant overlap between answers

provided by different students, then all students fail that

question. Don’t share completed answers with others.

Marking Scheme and word count

? The total marks for the written assessment is 50 and represents 50% of

your total mark for the unit. Part A is worth 12; Part B is worth 20 and

Part C is worth 18.

? Each question is worth either 1, 2 or 4 marks as indicated (at the end of

each question).

? A word count is set for each question (at the end of each question).

Answers should be within 10% of the word count.

 

 

 

 

 

2

Work with your tutor and your fellow students

 

The Written assessment is worth 50 marks (50% of total assessment in the unit). It is also the main

learning tool in the unit. It is very important that you work with your tutor and your fellow students

when completing this assignment. Tutors will look at your work in the tutorial and guide you.

 

Referencing for the written assessment

 

If you are using the textbook or the lecture notes to answer questions you do not need to reference

this but you do need to use your own words - not exactly what is in the text. The one exception to

this are definitions (e.g. of opportunity cost or absolute advantage, terms which we will be

discussing in the first week of lectures). If you are using something other than the text or the lecture

notes then a reference using a footnote will be fine.

 

Turnitin submission process

 

When you first submit your assignment, the turnaround of the similarity test from Turnitin is very

quick. However, if it is the second or later submission then each one can take up to 24 hours so

make sure you allow time for this.

 

For Technical assistance related to Canvas and turnitin please contact: ITS Service Desk on 03 9214

5000 (x5000) or Complete the Help request web form.

 

The link for submitting your assessment are found under the assessment folder in Canvas titled.

 

Good luck with the assignment.

 

 

 

 

3

Task 1: Economic Foundations and Market Forces

 

Read the following and answer questions 1 and 2.

 

Consider two individuals, Jenny and Mary who can produce both necklaces and bracelets. Jenny

can produce 20 necklaces or 30 bracelets in an hour and Mary can produce 15 necklaces or 15

bracelets in an hour.

 

1. What is absolute advantage? From the information provided who has an absolute

advantage in the production of necklaces? Who has an absolute advantage in the

production of bracelets? Explain why. (1 mark) –Word count 60

 

2. What is opportunity cost? From the information provided, what is Jenny 's opportunity

cost of producing one necklace? Explain why. What is Mary’s opportunity cost of

producing one necklace? Explain why. (2 marks) - Word count 80 + calculations

 

Answer questions 3 and 4 from Table 2

Table 2: Quantity demanded and supplied for the “Boost Juice”

Price ($) Quantity demanded Quantity supplied

4 1500 700

6 1200 800

8 900 900

10 600 1000

12 300 1100

14 0 1200

 

3. Draw the demand and supply curves for “Boost Juice”. What are the equilibrium price and

quantity of drinks? Explain why this is the equilibrium point. (1 mark) Word count 50

 

4. Explain, using the graph in question 3 above, what would happen if the price was initially

$4? Identify any surplus or shortage on the graph above. (2 marks) - Word count 150

 

 

 

 

4

5. Consider the market for ‘solar panels on the roofs of domestic houses’. Assume the market is

initially in equilibrium. Using the demand and supply framework explain what would happen

in the market for solar panels if the price of electricity (supplied via the electricity network)

was to increase. Include a graph in your answer. (2 marks) Word count 150.

 

Read the following short excerpt and answer Question 6.

Escape to the country drives price boom

Holiday spots and towns near regional centres are experiencing boom-level house price

growth as first-home buyers and tree changers flock to the country. …..

Young families were increasingly looking to the regions for a more relaxed lifestyle, WBP

Group chief executive Greville Pabst said. “Being able to have a bit of a retreat – it’s

quite attractive away from the busy pace of the city” Mr Pabst said.

He said affordability was also a huge driver of regional house price growth, and first-

home buyer stamp duty savings and government grants for new regional homes push

pushed prices up.

Author Jemimah Clegg

The AGE. May 5th, 2018. Page 16.

 

6. Using demand and supply analysis, and with the aid of a graph, explain how the fact that

young families are looking for a more relaxed lifestyle is affecting house prices and quantity in

the regional town. Make sure you identify any important determinants of demand and/or

supply and identify any shortage or surplus and how this affects quantity.

Explain using a graph and words how affordability issues in of houses in Melbourne is

affecting house prices and quantity in the regional town. Make sure you identify any

important determinants of demand and/or supply and make identify any shortage or surplus

and how this affects quantity.

Contrast the two forces above and explain why it may be important to understand the

difference between them if you are a property developer. (4 marks) - Word count 350