assignment
ECO100 Assessment 3 Problem-solving Exercises and short report writing – Individual work. 20% Due Date: 11:59 P.M. Sunday 13 September 2020 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. QUESTION 1: 45 marks The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Suppose the supply and demand functions for widget-corn are: QD = 100 – 5P (1) QS = 5P. (2) P is the price in dollar and Q is the quantity in kilograms. a. Determine the market equilibrium price and quantity of widget-corn? (6 marks) b. Calculate the consumer surplus, producer surplus, and total economic surplus at the market equilibrium. (7 marks) c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-corn sellers to charge $5 per kilogram. (i) What type of price regulation policy is this? Briefly explain. (3 marks) (ii) Calculate the impact of the policy on the quantity of widget-corn supplied and demanded. (6 marks) (iii) Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus. (5 marks) (iv) Is the outcome of the government’s policy efficient and, therefore, maintained or abandoned? Explain in detail. (8 marks) d. Using equations (1) and (2), sketch the demand and supply diagram and indicate your results from parts (a) – (d). Correctly label the diagram. (10 marks) QUESTION 2: 25 marks Table 1: Production Capacity of COVID-FREE LAND. Toilet Rolls Sanitizers 30,000 0 28,000 1,000 24,000 2,000 18,000 3,000 10,000 4,000 0 5,000 Use information in Table 1 above to answer the following questions: a. Using the above figures, graph the production possibilities Frontier (PPF) of COVI_LAND (Hint! Use Microsoft Excel, for accuracy) (4 marks) b. In your own words, while making use of the graph that you have created in part a, explain what the PPF is. Cleary state all assumptions and properties of the PPF. (6 marks) c. Normally, the people of COVID-FREE LAND demand of 3,000 sanitizers and 18,000 toilet rolls. Suddenly, there is outbreak of COVID-19 and the demand for sanitizers and toilet rolls increased to 4,000 and 20,000, respectively. How would COVID-FREE LAND meet its new demand. Identify and comprehensively discuss at least three possibilities or ways. (Hint: State any appropriate assumptions made). (15 marks) QUESTION 3: 30 marks Many movie consumers who used to rent DVDs are now patronising online video rentals, especially, streaming services. a. What impact did the advent of online video rentals and streaming have on the in-store movie industry? Use the demand and supply diagram to illustrate your answer. Pay attention to how the equilibrium quantity and price adjust. Make state all your assumptions. (10 marks) b. Which would be more price elastic, the demand for Netflix online streaming or the demand for online movie rentals in general? Explain. (6 marks) c. Would the cross-price elasticity of demand for online movie rentals and in-store movie rentals be positive or negative? What does your answer imply for the equilibrium price and quantity of online movie rentals? Use the demand and supply diagram to illustrate your answer. (6 marks) d. Because of COVID-19 most people are staying indoors, yet they cannot afford online streaming movies, like Netflix. Should the government regulate the price of online streaming? In your answer, critically discuss the pros and cons of price regulation. (8 marks) One soft copy of the report to be uploaded to Moodle Turnitin – Word .doc or .docx GENERAL INFORMATION/INSTRUCTIONS This individual assignment is worth 20 per cent of total assessment and SOFT COPY is to be submitted ON TURNITIN by 11.59 p.m. Friday of Week 9. • There are 3 questions, worth a total of 100 marks all together. After grading, the marks will be converted to 20% and uploaded onto Moodle. • A hard copy of the assignment must be submitted to the KOI Librarian in Kent street campus by 5.00pm, Monday of Week 9. You must keep the receipt after the submission for your own record. REMEMBER, you are also required to upload an electronic copy of the assignment in Moodle Turnitin by 11.59 p.m. Friday of Week 9. • Late submission will attract loss of 4 marks out of 20 marks (20 per cent), and any assignment submitted to the library after 5:00pm Monday of week 10 will not be accepted. 1. This assignment is an individual assignment. 2. Name and ID number of students must be clearly printed on the Assignment Cover Sheet. 3. You must follow the appropriate format explained below. Not following the appropriate format will cause a loss of some marks. • All written answers must be clearly typed and printed. Hand-written answers will NOT be accepted. • All assignment questions and sub-questions must be typed in order at the heading. • Answer each question on a different page. For example, if Question 1 (a) (b) (c) and (d) are answered on pages 1-2, then start Question 2 on page 3, etc. • You must analyse, explain, and show how and why you reached your answers. Providing just answers without explanation will not be rewarded with full marks. • You must also draw and include appropriate and relevant graphs and tables together in your explanation. Draw them using Microsoft Power Point/Word/Excel, NOT hand-drawn. 4. Copying the assignment contents from other individuals’ assignment is a serious violation of copy right. It will be penalized and will attract a VERY heavy loss of marks – “Fail”. • Please remember that it is not difficult to identify the contents that are copied from other individual(s). Write the answers in your own English words. • Please DO NOT SHOW your work to others. If you did, both the person who showed the assignment and the one who copied the assignment will be awarded zero out of 20 marks. Make sure you answer ALL THREE questions. You MUST read and check the assignment before submitting.