Task
There will be an assessment test that will comprise of 3 short essay/calculating questions and a Case Study. You are to complete Assessment No.2 by the due
date.
Assessment No.2 will focus on material covered in Weeks 4-7 of the subject.
Question 1 (20%)
A) Which of the following are public goods:
i) the judicial system
ii) iPods
iii) the quarantine service
iv) Angkor Wat (temple in Cambodia)
v) heart pacemakers
B) Why are public goods are not produced in sufficient quantities by private markets?
(Source: Layton et al 2012 p.102 questions 12 and 10)
Question 2 (30%)
Case study: What? High prices for tea and coffee?
Read the following article and answer the questions below.
Coffee price rise “ it’s bean a long time coming
The days of the $3 coffee may be numbered as café owners come under pressure to pass rising costs on to legions of coffee drinkers. In addition to increases in
rents,
transport costs and milk prices, cafes were within weeks of being hit with higher prices for coffee beans, Australian Coffee Traders Association vice-chairman
Andrew
Mackay warned: œCoffee’s been really, really strong but, historically speaking, we’re seeing prices at almost 10-year highs in the Arabica market and the same with
Robusta¦ œThe market price for Arabica beans had gone from roughly $US1.30 a pound to $US1.58 a pound over the past three to four weeks, Mr Mackay said¦
Tea, coffee
and œfood drinks rose 4.5 per cent in the three months to December, according to the latest figures, and coffee drinkers thinking of switching to tea will find no
respite as tea prices are at record heights. The managing director of tea retailer T2 Maryanne Shearer said¦The demand for tea has increased dramatically, initially
as a result of the wellbeing focus on people’s lifestyles. It’s very much a global thing.
(Source: Midalia, A. 2008. ˜Coffee price rise “ it’s bean a long time coming.’ The Australian Financial Review, Thursday 21 February).
a) Draw a diagram to show the change in the coffee market that has resulted in higher prices for coffee.
b) Draw a diagram to show the change in the tea market that has resulted in higher prices for tea.
c) Explain the non-price determinants involved in the change in each market.
d) Why would the writer suggest coffee drinkers might be thinking of switching to tea.
Question 3 (30%)
Use the following demand schedule for a monopolist to calculate total revenue (TR) and marginal revenue (MR). For each price, indicate whether demand is elastic,
unit
elastic or inelastic. Using the same data, graph the demand curve and the total revenue curve, the marginal revenue curve and the total revenue. Identify the
elastic,
unit elastic and inelastic segments along the demand curve.
(Source: Layton et al 2012 p.206 question 6)
Price
($) Quantity demanded Total Revenue Marginal Revenue Price Elasticity of Demand
5.00 0
4.50 1
4.00 2
3.50 3
3.00 4
2.50 5
2.00 6
1.50 7
1.00 8
0.50 9
0.00 10
Question 4 (20%)
A) Explain the GDP gap.
B) Explain why comparing the GDPs of various nations might not tell you which nation’s people are better off.
(Source: Layton et al 2012 p.304 question 6 and p.280 question 13)
Rationale
The purpose of this assessment is to provide an opportunity for you to assess whether you are keeping up with the material in the first few weeks of the subject
and to
assess your understanding of the material.
Marking criteria
Your mark will be the based on the percentage of questions you get correct on the Assessment applying the following rubrics.
Problem types/criteria (FL)
0% to 49% (PS)
50% to 64% (CR)
65% to 74% (DI)
75% to 84% (HD)
85% to 100%
Presentation Fail Pass Credit Distinction High Distinction
Work is set out in a clear and coherent manner which aids the development of the student’s arguments. The presentation is professional. Set out in a disorganised
and
incoherent manner. Shows some attempt to organise in a logical manner. Shows organisation and coherence. Carefully and logically organised. Shows a
polished and imaginative approach to the topic.
Quantitative problems FL PS CR DI HD
Work applies principles of economics correctly to quantitative analysis. Frequent errors or unacceptable mistakes indicative of a lack of understanding of core
principle(s). Applies understanding of relevant principles, shows workings but contains some major errors. Applies correct principles and calculations,
substantiated with workings or diagrams in order to arrive at the right answer, shows workings but contains some minor errors. Applies correct principles and
calculations, substantiated with workings or diagrams in order to arrive at the right answer, shows workings but contains few minor errors. Applies correct
principles and calculations, substantiated with workings or diagrams in order to arrive at the right answer. There are negligible errors/no errors in calculations.
Conceptual problems FL PS CR DI HD
Work applies principles of economics correctly in discussing results, conclusions, and/or recommendations. Discussion reflects lack of basic understanding of
relevant principles. Discussion reflects basic understanding, but not deep understanding of relevant principles. Discussion reflects good understanding of
relevant principles. Discussion reflects excellent understanding of relevant principles. Principles are applied in the appropriate manner to arrive at the
correct answer. The use of relevant principles shows creativity and imagination.
