Economics Assessment & Exam Questions

Objectives

This assessment item relates to the course learning outcomes 1, 2, 3 and 4.

Question 1                                                                                        (22 marks)

(a)           Consider the following production possibilities frontier data in the table below.                           (5 marks)

(i)        Draw a diagram with appropriate labels.

(ii)      Indicate attainable, unattainable, efficient and inefficient areas on the diagram.  

(iii)    Explain the concept of increasing opportunity costs using data provided.

(iv)    Using the data provided draw a new diagram showing growth in the resource base. Explain the changes to the production of both goods.

(v)      Assume that the decision is made to invest more in capital goods than in consumption goods.   Using the data provided draw a diagram and explain the impact of this decision on future production capacity.

(b)          Suppose demand (Q_D ) and supply (Q_S) in a market can be expressed by these equations:                                                                                               (5 marks)

Q_D= 170-1.5*P

Q_S= 50+2.5*P

(i)                 Complete the table. What is the equilibrium price and quantity? If the prevailing market price is $60, what are the quantity demanded and the quantity supplied?

(ii)               Draw the diagram and calculate the change in the equilibrium if demand changes to Q_D= 200-0.5*P. Explain why the change could occur (with examples).

(c)Utilise the demand-supply market models (for each market below) to graphically illustrate and explain the following scenarios (in the short run).  Identify for each scenario what the effects on price and quantity are likely to be and show the effects on the diagram. State your assumptions.

(i)                 The market for luxury cars if there is an increase in households’ income.         (3 marks)

(ii)               The market for housing if there was an increase in electricity prices.     (3 marks)

(iii)             The market for tea if the price of milk increases.                                   (3 marks)

(iv)             The market for Ipad 2 as the price of Ipad mini decreases.                    (3 marks)

Question 2  (22 marks)

(a)           Complete the table. State when the coefficient is elastic, inelastic or unitary elastic.(3 marks)

(i)        Using the table above draw the diagrams illustrating price elasticity of demand ranges and total revenue curve related to the price elasticity demand ranges.                                                      (2 marks)

(ii)      Briefly explain whether you advise the firm to raise the price from $30 to $40. Provide numerical justification of your advice.                                                                                                      (2 marks)

(iii)    Briefly explain whether you advise the firm to raise the price from $70 to $80. Provide numerical justification of your advice.                                                                                                      (2 marks)

(b)          The table below shows the number of workers and output data.

(i)        Complete the table.                                                                                             (1 mark)

(ii)      Using the numbers from the table above, draw a diagram showing total output, marginal products curves and identify marginal returns.                                                                                   (2 marks)

(iii)        Consider the following short run average total cost (SRATC) curves. Calculate the long run average cost (LRAC). Draw the diagram showing the relationship between three SRATCs and the LRAC curve.                (2 marks)

(iv)        Draw the long run average costs curve (based on the data provided) assuming an infinite number of plant sizes. State your assumptions.                                                                                    (2 marks)

(c)   The table below shows a cost schedule for a monopoly. Complete the table and draw the diagram. (4 marks)

i)              Using the marginal approach to maximise profits, find the price that monopolist would charge to maximise its profit. What is the level of profit maximising output? (2 marks)

Question 3                                                                                        (44 marks)

Please note that this question requires a substantial research and real life case study/examples

(a)    Explain why governments sometimes impose a price ceiling in a competitive market. Illustrate the effects with the diagram.

Choose a case study where a price ceiling has been used. Identify why the price ceiling was thought to be necessary in this market. Identify the results of the government intervention. Suggest a better way of dealing with the issue in your case study. (20 marks)

(b)   Explain three types of long run supply curves using the real industries.        (14 marks)

Substantial research and analysis  (10 marks)

Additional marks:

Appropriate use of referencing and clear written expression      (6 marks)

Overall presentation of work                                                 (6 marks)

Assessment criteria

·                Besides the textbook, you should also refer to a several other books, journal articles and relevant websites in answering these questions.

·                Sources must be acknowledged and a list of references provided.

·                Concepts must be defined accurately and completely.

·                The assumptions upon which the analysis is based must be stated at the onset.

·                Diagrams must be drawn properly, correctly labelled and the relations they depict explained.

·                Photocopied and scanned graphs are not acceptable.  It is preferable to hand-draw a graph than to copy one.

·                Answers must be complete, addressing the specific tasks nominated in the questions.

·                Where a question has more than one part, so too should the answers.  Ensure complete coverage.

·                You must work on the assignment questions progressively each week – which will prevent you from asking for extensions.

·                Remember an extension is not a gift, it is a burden.

Examination

Examination conditions

·         This examination is closed book.  Closed-book means you are not permitted to take any materials into the examination room with you unless specified.

·         You may take a non-electronic, concise, direct translation dictionary into the examination room in accordance with CQU policy.  The dictionary must not contain any notes or comments.

·         You may take a non-programmable, non-text-retrievable silent-only calculator into the examination room in accordance with CQU policy.

View the University’s policy on examination in the Assessment of Coursework Policy at:

http://policy.cqu.edu.au

View important examination information at:

http://handbook.cqu.edu.au/Handbook/information.jsp?id=126

The examination timetables will be made available later in the term.  View the examination timetable at:

http://www.cqu.edu.au/current-student/timetabling

Further information on the examination will be available on your course website later in the term and within your revision lecture.

NOTE:  The examination information provided in this Course Profile also relates to Deferred Exams.  No separate advice will be provided in the case of a deferred exam.