ECO100 Assessment 3 Problem-solving Exercises and short report writing – Individual work. 20% XXXXXXXXXXDue Date: 11:59 P.M. Sunday 13 September 2020 This assessment is designed to allow students to...

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ECO100 Assessment 3
Problem-solving Exercises and short report writing – Individual work.

20% XXXXXXXXXXDue 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 XXXXXXXXXX)

QS = 5P XXXXXXXXXX)
P is the price in dollar and Q is the quantity in kilograms.
a. Determine the market equili
ium price and quantity of widget-corn? (6 marks)

. Calculate the consumer surplus, producer surplus, and total economic surplus at the market equili
ium. (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). Co
ectly label the
diagram. (10 marks)

QUESTION 2: 25 marks
XXXXXXXXXXTable 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)

. 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 out
eak 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 equili
ium quantity and price adjust. Make state all your assumptions. (10
marks)
. 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 equili
ium 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 Li
arian 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 li
ary 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
ewarded 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.
Answered Same DayAug 26, 2021ECO100ICMS (International College of Management Sydney)

Solution

Yash answered on Sep 02 2021
53 Votes
Question 1:
a.) At market equili
ium, QD = QS
Hence,
100-5P = 5P
10P=100
P=100/10=10
Therefore,
Market equili
ium Price = P=$ 10
Market equili
ium Quantity = 5P= 50 Kg.
.)
    Price
    QD = 100-5P
    QS = 5P
    0
    100
    0
    5
    75
    25
    10
    50
    50
    15
    25
    75
    20
    0
    100
Consumer Surplus = ½*b*h = ½*50*(20-10) = $250
Producer Surplus = ½*b*h = ½*(10-0)*50=$250
Economic Surplus = Consumer Surplus + Producer Surplus = $(250+250) = $ 500
c.)
i.) This policy is known as Price fixing. Under this policy, govt. fixes the price of goods instead of price to be fixed by the market force of demand & supply.
ii.) At $5/Kg,
Qd = 100 – 25 = 75 kg
Qs = 5P = 25 Kg
iii.) Consumer Surplus = ½*b*h = ½*25*(20-5) = $187.50
Producer Surplus = ½*b*h = ½*(5-0)*25=$62.50
Total Economic Surplus = $ (187.50+62.50) = $250.
Hence, due to price fixing Economic surplus had been reduced to $250 from $500.
iv.) The outcome of this policy is inefficient & therefore to be abandoned due to the following reasons:
a.) Due to this price, demand had been increased and supply had been reduced which further widened the gap of demand & supply.
.) This policy reduces both the consumer surplus as well as producer surplus.
c.) Due to shortage of supply, black marketing may prevail.
d.)
2.) a.)
.) Production possibility frontier (PPF) is a chart which states various variations in the quantity of two products manufactured out of the limited resources available.
Assumptions:
PPF is based on the following assumptions:
1. An economy had a scarcity of resources. However, we can transform these resources for other use.
2. out of the scarce resources, we can produce only 2 products.
3. All the resources had been optimally utilised;
4. Resources were variantly efficient in the production of 2 products. Hence, productivity level of the products varies.
5. Highness of technology remains constant.
The basic properties of PPF are:
1. PPF is downward sloping.
Since it had been assumed that only two goods can be produced out of the scarce available resources with the same technology, if the production of one goods had to be increased then production of other goods had to be curtailed which resulted in inverse relation in changes in qty. of these two goods envisaging the PPF curve to be downward sloping.
2. PPF is Concave Shaped:
Due to increasing tend of marginal opportunity cost, PPF is concave shaped.
3.) An outward shift in PPF indicates diversification in economy.
4.) An inward shift in economy indicates shrinkage of economy.
c.) Using the same resources and technology, COVID – Free Land can either:
a.) continuing the production of 3,000 sanitizers & 18,000...
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