Assessment Type: Problem-solving exercises and short report writing - Individual work.
Purpose: This assessment is designed to allow students to demonstrate their understanding of fundamental economic principles and tools and apply them to the solution of problems in business,government and individual behaviour. This assessment contributes to learning outcomes a, b and d.
Value: 20%Due Date: Friday Week 9
ECO100Submission: One soft copy of the report to be uploaded to Moodle Turnitin - Word .doc or docx
Topic: Problem-solving exercises and short report writing on EconomicsTask Details:QUESTION 1: 35 marks; Word Limit: 400 words
The demand for and supply of cashew nuts in Ghana are, respectively, given by Q"=12000 - 200 PQ°=7000+50P(2)Where P is price in dollars per kg, and Q is the quantity of cashew nuts.a.Using equations (1) and (2) draw the demand and supply diagram of cashew nuts. Correctly labelthe diagram.(i) Find the equilibrium price and quantity of cashew nuts. (5 marks)b.To encourage the consumption of cashew nuts, because of its nutrition properties, the governmentpassed a price requlation law that set the price of cashew nuts at $18 per kg.Briefly explain the type of price regulation policy the government introduced. (2 marks)Calculate the quantities of cashew nuts demanded and supplied under the price regulationpolicy. (10 marks)Write a brief comment how the quantity demanded compares with the quantity suppled,and the efficiency of the cashew market after the price regulation policy. (3 marks)C.One year after the price regulation, the government allowed importation of cashew nuts and imposeda tariff (tax) of $1 per kg of cashew nuts imported.Determine the quantities produced by domestic firms and purchased by domesticconsumers. Show them on the diagram (7 marks)How much tariff (tax) revenue did the government collect. (3 marks)Calculate the inefficiency caused by the tax. Clear indicate your results on the diagram. (5marks)QUESTION 2: 25 marks. Word Limit: 400 Words.Brazil experienced its worse drought in history and many states experienced water shortages. The statesresponded with different policies and, as a result, achieved different outcomes, including the impacts onefficiency. The water market was in equilibrium before the drought.PART IUse the demand and supply diagram to depict the water market before the drought. Describe andcorrectly label the variables in the diagram. (2 marks)b. A few states allowed the price of water to increase until the quantity demanded equalled the quantitysupplied. Explain in detail how the price and quantity of water adjusted to the new equilibrium.Illustrate your answer by referring to the diagram of the water market. (5 marks)Was the outcome efficient? Explain by referring to the diagram.(3 marks)
QUESTION 2: 25 marks. Word Limit: 400 Words.
Brazil experienced its worse drought in history and many states experienced water shortages. The states responded with different policies and, as a result, achieved different outcomes, including the impacts on efficiency. The water market was in equilibrium before the drought.
PART 2Use the demand and supply diagram to depict the water market before the drought. Describe andcorrectly label the variables in the diagram. (2 marks)b.A few states allowed the price of water to increase until the quantity demanded equalled the quantitysupplied. Explain in detail how the price and quantity of water adjusted to the new equilibrium.Illustrate your answer by referring to the diagram of the water market. (5 marks)Was the outcome efficient? Explain by referring to the diagram. (3 marks)C.PART IIDraw a new demand and supply diagram to depict the water market before the drought and use it to illustrate your answers to parts (d) - (f).d.Most states did not allow the price of water to change, despite the impact of the drought on the water market. Describe the price regulation policy implemented by these states. Use the diagramto illustrate your answer. (2 marks)Examine the impact of this policy on the quantity of water supplied and demanded and efficiency of the water market. Refer to the diagram in your explanation. (5 marks)
PART IlIThe two different policy responses received wide coverage in the financial press. Some commentators saidthe policy chosen did not matter, provided the overall outcome was fair. Assess whether or not each of theoutcomes was fair. Apply the two notions (results and rules) of fairness in your assessments. (8 marks)QUESTION 3: 40 marks.The Australian government has authorised Pfizer and AstraZeneca to produce and sell COVID-19 vaccinesEach firm must decide whether to charge 'high price' or 'low price'. If both firms charge 'high price', then eachwould make a profit of $150 million. If both charge low price', then each would make a profit of $100 million.If Pfizer charges 'low price' while AstraZeneca charges 'high price, then Pfizer would earn $200 million andAstraZeneca would earn $60 million. If Pfizer charges 'high price' and AstraZeneca charges low price, thenPfizer would earn $60 million and AstraZeneca would earn $200 million.The information above suggests Pfizer and AstraZeneca are a duopoly operating in an oligopoly market. Usethe information to answer the following questions.a.Derive the payoff matrix from the information given and write down each firm's strategies. (6marks)b.Determine whether or not a dominant strategy equilibrium exists in this duopoly game. In youranalysis, clearly show how each player chooses their strategy. (12 marks)..What is the Nash equilibrium of this game? Explain in detail how you arrived at your answer. (12marks)d.One policy analyst said Pfizer and AstraZeneca are engaged in a Prisoner's dilemma game. Doyou agree or disagree with this analyst? Critically discuss. (10 marks).