economics

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 1 of 6

UNIVERSITY OF SOUTH AUSTRALIA SCHOOL OF COMMERCE

& SAIBT

ECON1008 Principles of Economics

SEMESTER 1, 2015

ASSIGNMENT 2 – Applied Writing

Nicky Kassoudakis Course Coordinator School of Commerce University of South Australia

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 2 of 6

IMPORTANT REQUIREMENTS FOR ALL ASSIGNMENTS

Assignments are compulsory and must be presented by the due date.

Students should stick strictly to the word limit. Penalty marking at the rate of 1% per 100 words (or part thereof) will be imposed on papers that exceed the word limit. Students may add a reasonable amount of material to appendices but should only use appendices as a way of supplying corroborating evidence for points made in the body of their assignment. Under no circumstances should students use appendices as the main vehicle for carrying their analysis forward. If they do, then such appendices will be included in the word count.

References and plagiarism

Any work containing plagiarism will score zero marks. (For policy on this issue see the section on academic misconduct and plagiarism in: http://www.unisa.edu.au/policies/manual/default.asp)

These assignments are designed to test students’ understanding of economic

theory rather than the ability to research and apply outside sources of

information.

Students are expected to acknowledge the source of their information including

their set texts in a Reference list. One mark will be deducted if this is not

adhered to including for copied diagrams.

References that are actually used should be cited.

Use the Harvard referencing system. (Note: For further information about this system, please refer to the Learning Connection website on Referencing (and Plagiarism), which can be accessed at: http://www.unisa.edu.au/ltu/students/study/referencing/harvard.pdf

—specific information about the Harvard system is available as part of the section ‘Styles of referencing’.)

Although use of references from the Internet is encouraged, they must be cited in the body of your work and listed in full in your list of references.

For the main part, you are expected to answer questions in your own words. Whilst quotations are acceptable, they should be kept to a reasonable length and put between quotation marks. A student cannot expect to pass an assignment which consists of a series of linked passages copied off the World Wide Web or other source irrespective of whether the source is acknowledged or not.

Late assignments that do not have approved extensions will incur the following

penalties: For every day late, 1 mark will be deducted.

Assignments received more than two weeks after the due date will not be

marked.

You are advised to make a copy of your work prior to submission.

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 3 of 6

ASSIGNMENT 2: APPLIED WRITING

Weighting: 25%

Requirement: Answer the questions relating to a newspaper article

Word limit: 1250 words

Due date: Week 7 Monday 6 th

April 2015 at 4pm SA time.

Submission method Please upload on Turnit under week 7 Moodle portal

SUBMISSION AND RETURN OF ASSESSMENT PIECES

When preparing an assignment, please do the following:

• Please attach the below assignment cover sheet to your assignment. Make sure

you include your ID number. See page 6.

• Include your FULL NAME AND ID on the first page of your assignment

• Number the pages of your assignment.

• Include the word limit on the bottom of the first page.

• Additionally, assignments are NOT, under any circumstances, to be submitted

by email. This bypasses the assignment tracking systems set up by the School of

Commerce and increases the chances that your assignment will be lost.

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 4 of 6

INSTRUCTIONS:

Read the following excerpts from the article ‘Petrol tipped to hit 85 cents’

published on 14 January 2015 and answer all of the questions. You are expected to

use graphs to explain your answer.

Petrol tipped to hit 85 cents The West Australian, Andrew Tillett January 14, 2015 Petrol could plunge to as low as 85 cents a litre, according to one WA motoring body, as the main global oil benchmark price drops below $US50 a barrel. Bowser prices in Perth have continued to fall after reaching a five-year low last week, with motorists today paying 106.7 cents a litre for the cheapest unleaded fuel, according to FuelWatch. With no sign the slide will stop any time soon, WA Motor Trade Association chief executive Stephen Moir said petrol prices could go below $1 and hit their lowest level in 15 years. Mr Moir said the oil industry was looking at a perfect storm as countries kept up or even increased production, putting a price of $30 a barrel in the ball park if the trend continued. "We're looking at a return to the prices we haven't seen since the late 90s," he said. "You could be paying 85 cents to 90 cents." The Royal Automobile Club said it was reasonable for West Australians to expect petrol prices to continue falling as the oil price dropped but cautioned it would eventually hit a floor. "Petrol prices of below $1 per litre are not out of the question," manager vehicles and fuel Alex Forrest said. "That would make it a six-year low, but motorists should also be aware that the lower it goes, the more likely the possibility of an upward correction." Amber Millar filled up her Toyota RAV4 at Armadale's Puma Energy service station, one of the outlets selling Perth's cheapest petrol yesterday. She said she was saving $20 to $30 a week and never thought petrol would get so low again. "I'm loving it," she said. "If you are on a budget week to week, it's a huge saving." Mrs Millar said motorists would be "stoked" if petrol fell to 85¢ a litre. "It means you can do a lot more with your money." CommSec chief economist Craig James said while petrol was on track for $1 a litre, fuel companies were unlikely to sustain prices below that mark. Mr James said it would probably take a major oil producer such as Saudi Arabia saying it wanted a target of $40 a barrel to stabilise the oil price. If the oil price fell to that point, it would cut a further 5¢ off the petrol price here. But the oil price would need to be $30-$40 a barrel to force producers to reduce supply, he said. "Effectively crude oil prices are in freefall," he said. Mr James said the wholesale price in Perth yesterday was 104.6 cents a litre. That price would need to dip below $1 before motorists paid a similar amount.

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 5 of 6

Questions

1. Assuming that petrol operates in a perfectly competitive market, use a well-labelled demand and supply (D-S) model to explain how

market equilibrium price of petrol is being determined. Please clearly

explain the equilibrating process.

[4marks]

2. Using the demand and supply model, explain and illustrate what factors have caused the market price for petrol to fall. In your answer

clearly explain the connection between the global wholesale price of

oil and the price for petrol at the domestic retail level. Clearly explain

the equilibrating process in the retail market for petrol. (Hint: use

two demand and supply diagrams)

[8marks]

3. Give an example of a complementary good to oil and use the demand and supply model to explain the likely impact on this related market

in terms of changes to equilibrium price and output.

[4 marks]

4. Do you think the demand for petrol is price elastic or price inelastic? Explain your answer based on the determinants of price elasticity of

demand and also by making reference to the newspaper articles

excerpts relating to the likely impact on consumers’ total expenditure

on petrol. Use a diagram to illustrate your answer. [6 marks]

Presentation and referencing: 3 marks

Total marks: 25 marks

ECON1008 Principles of Economics S1 2015 Assignment Booklet Page 6 of 6

Assessment feedback form

ECON1008—Principles of Economics (2015)

Assignment 1 Name_______________________ Unisa ID Number____________________

Key components of this assignment Performance on this component Comment

Excell-

ent

Good Fair Poor Very

Poor

Demonstrate effective use of some of the fundamental methods and tools of economics.

Apply elementary microeconomics and models in a new context.

Effective communication using appropriate economics terminology and models (usually in the form of diagrams) which are incorporated into your discussion.

Presentation and structure.

Summary comment

Assignment grade/mark

This form meets the 2015 requirements of UniSA’s Code of Good Practice: Student Assessment