Evonomics

Foundation & Pathways, Economic Principles ECO10001

©Copyright: 2019 Swinburne University of Technology CRICOS: 00111D G:/PAVE/02 FP/03 Teaching/2019/03 UniLink/Uni Link Units/ECO10001 Economic Principles/Assessment – Other/TP3 2019

Case Study Assessment

Learning Objectives:

This assessment reflects Unit Learning Objectives 1,2 and 3. Students who successfully complete this

task should be able to:

• Interpret and explain economic principles and models.

• Use economic concepts and knowledge to explain and evaluate decision making by individuals, firms, and government.

• Describe economic outcomes in markets and how these are affected by market structure and the macroeconomic environment.

Assessment Task:

You are asked to conduct a case study analysis of the two following scenarios using the question

prompts as structure for your response.

Students are strongly advised to examine the Case Study Marking Guide on Canvas for additional

guidance in design of responses.

Plagiarism warning:

Swinburne University students should be aware of the consequences of plagiarism

https://www.swinburne.edu.au/current-students/manage-course/exams-results-

assessment/plagiarism-academic-integrity/plagiarism-misconduct/ Students can check their plagiarism

scores on submission of their work in TurnItIn. Copying other student’s work is a form of cheating.

Plagiarized work will not earn credit and penalties may be imposed if this occurs. Students are

expected to paraphrase sources in their own words.

Assessment Requirements:

Submit by Friday 11.59 pm at the end of Week Four

Form of submission: TurnItIn

Style Guide: Responses will be accepted only if typed in Word format

Font – Calibri, size 11,

Line spacing – 1.5,

Page layout – normal,

Separate title page required,

Foundation & Pathways, Economic Principles ECO10001

©Copyright: 2019 Swinburne University of Technology CRICOS: 00111D G:/PAVE/02 FP/03 Teaching/2019/03 UniLink/Uni Link Units/ECO10001 Economic Principles/Assessment – Other/TP3 2019

Responses should be comprehensive and explanatory.

Clearly number all answer responses. Do not copy the questions.

Case Study assessment weighting: 20%

Scenario One

Background:

In 2018, a newspaper article reported “more and more Aussie drinkers are choosing mid-strength beers

and non-alcoholic beverages over full-strength brews”. The article described how per capita

consumption of alcohol was declining in Australia, but that sales were increasing for mid-strength beers

and non-alcoholic beverages. The article stated these trends were driven by millennials (consumers

between the ages of 18 to 34) drinking less alcohol per capita than for older aged groups. In their choice

of drinks, millennials were more likely to consider new craft beers and " health factors such as low carb,

calories, vitamin-fortified and organic as very important" factors in decision making.

Task:

Using competitive market theory (as taught in Module One) explain what will happen to the

equilibrium price and equilibrium quantity for full strength beer as a result of a change in tastes to

mid-strength beers and non-alcoholic beverages.

To meet the requirements of the Marking Guide, students are strongly advised to complete the

following steps: Assume illustrative figures and prices only.

1. a) Create imaginary demand and supply curves for full-strength beer before mid-strength beers

and non-alcoholic beverages became more popular. Use illustrative figures with scales on axes,

label all curves and axes, identify the equilibrium price and quantity and create a diagram

heading. Diagrams (including computer generated) which do not have all these features will not

be awarded full marks.

b) Replicate the same demand and supply diagram now showing how the equilibrium price and

quantity for full-strength beer has changed after consumers have shifted their preferences to

mid-strength beers and non-alcoholic beverages. Include all labels.

2. Choose and fully explain the relevant demand or supply determinant that initiated the pricing

and production quantity change for full-strength beer. Ensure you cite numerical examples

from your second diagram to explain and illustrate the change. Explanations which do not

example quantity changes at given prices will not be awarded full marks.

Foundation & Pathways, Economic Principles ECO10001

©Copyright: 2019 Swinburne University of Technology CRICOS: 00111D G:/PAVE/02 FP/03 Teaching/2019/03 UniLink/Uni Link Units/ECO10001 Economic Principles/Assessment – Other/TP3 2019

3. Using competitive market theory, explain fully the ‘market force’ that caused the equilibrium

price and quantity for full-strength beer to change. Students in their written descriptions are

expected to refer to figures in their second diagram. Explanations which do not explain the

relevant market force in operation and example quantity changes at changing prices will not

be awarded full marks.

4. On a third diagram, show with supporting written commentary, what other

circumstances/determinant/variable would need to have changed to allow the equilibrium

quantity for full-strength beer to remain unchanged in circumstances of a change in tastes to

mid-strength beers and non-alcoholic beverages.

Scenario Two: Using the prompts below (which closely align with the Marking Guide), make informed

comments about the price elasticity of demand for full-strength beer.

Task:

1. (i) Explain what the ‘price elasticity of demand’ for full-strength beer means.

(ii) Using the price elasticity coefficient formula, calculate the price elasticity of demand for

full-strength beer using the following imaginary data:

(Note: do not use the ‘mid-points price elasticity of demand’ formula, show all workings).

Year Average beer price* Quantity of beer sold ('000 litres**)

2016 $47.00 75,371

2017 $50.00 72,778

(*price for a typical ‘6 pack’ or carton of full-strength beer in 375mL bottles)

(** for the purposes of this exercise, ignore the '000 reference)

(ii) From your data above, state was the type of price elasticity of demand faces full-strength

beer.

(iii) Explain what the term you have used above means.

Foundation & Pathways, Economic Principles ECO10001

©Copyright: 2019 Swinburne University of Technology CRICOS: 00111D G:/PAVE/02 FP/03 Teaching/2019/03 UniLink/Uni Link Units/ECO10001 Economic Principles/Assessment – Other/TP3 2019

(iv) If the beer industry wanted the quantity demanded of beer to increase 10%, assuming your

Ed score, in what direction and by how much exactly would beer price levels need to

change? Show workings.

2. Assume the government is considering increasing taxes on full-strength beer sales to raise

revenue. Using the appropriate ‘total revenue test rule’ in conjunction with your answer from

(i) above, explain whether tax revenue will rise or fall following the tax increase.

3. Explain two reasons why for different groups of people the price elasticity of demand for full-

strength beer could be elastic OR two reasons why the price elasticity of demand beef could be

inelastic. Define all terms used.