INTERNATIONALISATION, INFORMATION FLOWS AND NETWORKING IN RURAL AND REGIONAL FIRMS: IMPLICATIONS FOR REGIONAL DEVELOPMENT 1 Combined Microeconomics and Macroeconomics Assignment Principles of...

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INTERNATIONALISATION, INFORMATION FLOWS AND NETWORKING IN RURAL AND REGIONAL FIRMS: IMPLICATIONS FOR REGIONAL DEVELOPMENT 1 Combined Microeconomics and Macroeconomics Assignment Principles of Economics BUECO1509 Semester 1, 2020 Prepared by Paul McPhee (Course Coordinator) Checked by David Spiers (Moderator) Instructions for Candidates: Choose any three (3) questions from Part A (Microeconomics), plus any three (3) questions from Part B (Macroeconomics); Each question is worth ten (10) marks; This assignment comprises 20 per cent of total assessment: (10 per cent for each of Part A and Part B); Please type your assignment solutions; Use only the textbook material as your data source. That is, this is a course covering basic and fundamental concepts. Therefore, it is not necessary to search the internet or other textbooks to find answers to these questions. Just use the textbook to answer your questions; However, all definitions, diagrams and direct quotations must be referenced as per the course description specified method; Please use the numbering system as provided on this document to identify your questions answered; Please attach a cover sheet which is available from the school office and on it show your full name and student identification number; Please upload your assignment to the ‘Assignment Submission Folder’ on ‘Moodle’ PART A (MICROECONOMICS): Choose only three (3) questions to answer. Question 1: There is no such thing as a ‘free lunch’. Illustrate and explain using a diagram, whether you agree or disagree with this statement? (2.5 marks for the correct diagram, plus 2.5 marks the correct explanation) Identify the following goods as either public goods or private goods and explain why you think it is so. Economic data produced by a government agency that must be paid for before you access and use it; Prescription reading glasses; The Defence system; Economic data produced by a government agency that is freely available; The quarantine system. (1/2.mark for each correct identification; 1/2 mark for each correct reason) Question 2: How will the following changes affect the market price of wheat flour (assuming that the market is initially in equilibrium)? In each case, illustrate with a diagram what happens to the demand and/or supply curves and, as result, what happens to the equilibrium price and equilibrium quantity. (a) People consume more bread; (b) The discovery of a new cheaper way of milling flour; (c) The prices of other grains rise; (d) Rice and potatoes fall in price (1.25 marks for each diagram plus 1.25 marks for each correct explanation) Question 3: Illustrate and explain using a diagram, the difference between the ‘law of diminishing marginal returns’ and returns to scale within the concept of ‘economies of scale’. (1.25 marks per diagram plus 1.25 marks per explanation: therefore total 5 marks) Illustrate and explain using diagrams why perfectly competitive firms are price takers. Hint: one diagram for the firm and one diagram for the industry. (1.25 marks per diagram plus 1.25 marks per explanation: therefore total 5 marks) Question 4: The following table gives the short-run costs for an imaginary firm. Output TFC TVC TC AFC AVC AC MC 0 - - - – – – - 1 - 8 - 10.00 - - - 2 - 12 - - - - - 3 10 - 25 - - - - 4 - - 27 - - - - 5 - - - - 4.00 - - 6 - - - - 4.00 - 5 7 - - - - - - - 8 - - - - - 5.75 - 9 - 48 - - - 6.44 - 10 - 70 - - - - (a)Fill in the figures for each of the columns. (4 marks) (b)At what output do diminishing marginal returns set in (assume constant factor prices)? (2 marks) (c)Draw AFC, AVC, AC and MC on the same diagram. Be careful to plot the MC figures mid-way between the figures for quantity (i.e. at 0.5, 1.5, 2.5, etc.). (4 marks) Question 5: Define and explain: The price elasticity of demand? (1 mark) The income elasticity of demand? (1 mark) The Cross-Price Elasticity of Demand? (1 mark) Why should a firm or business entrepreneur understand the difference between each of the three concepts? (2 marks) Interpret the following two (2) Income Elasticities of Demand (YED) and state if the goods are normal or inferior and explain your reasoning (2.5 marks) YED= + 0.7 YED= - 3.5 Interpret the following Cross-Price Elasticities of Demand (XED) and state if the goods are substitutes or compliments and explain your reasoning (2.5 marks) XED= + 0.7 XED= - 2.6 Question 6: Illustrate and explain using a diagram how a long-run average cost curve relates to a series (or several) short-run average cost curves. (1.5 marks for diagram plus 1.5 marks for explanation; totals 3 marks) Illustrate and explain using a diagram, the different phases in a long-run average cost curve. (1.5 marks for diagram plus 1.5 marks for explanation; totals 3 marks) Please provide at least two (2) reasons for two (2) of these three phases to exist. (1 mark each; totals 4 marks) PART B (MACROECONOMICS): Choose only three (3) questions to answer. Question 7: Why are quarterly movements in a country‘s GDP measure so important? (1 mark) What is it called when a country has two successive negative quarters of economic growth? (1 mark) When the economy is heading into a recession, illustrate and explain using diagrams, how economic policy instruments can be used by the government and the central bank to prevent this from occurring? (6 marks) Will these instruments work to prevent the onset of recession? (2 marks) Question 8: Illustrate and explain using a diagram the four (4) phases of the business cycle (2 marks); Explain how these phases come about (i.e. what influences cause the turning points to occur) (2 marks); Explain the different types of unemployment and how they come into existence (2 marks); Illustrate and explain using a diagram how the money-market functions (4 marks) . Question 9: Illustrate and explain using two (2) diagrams, the difference between demand-pull and cost-push inflation; (1 mark for each diagram plus 1 mark for each explanation) Provide two examples or causes of each type of inflation. (1 for each example or cause: totals 4 marks) Illustrate and explain using a diagram, how these two forms of inflation interact with each other. (4 marks) Question 10: Consider a macro-economy that was initially at equilibrium. Using an aggregate demand and aggregate supply diagram model of the economy, graphically illustrate and discuss the short-run and long-run effects of the following events upon the economy: The imposition of a carbon tax upon local big polluting companies; An appreciation in the foreign exchange rate value of the economy’s currency; A major trading partner’s economy fall into recession; The country’s main exports fall in price while the goods the country imports from abroad rise in price (2.5 marks each) Question 11: Consider a macro-economy that was initially at equilibrium level of real GDP. Using an aggregate demand and aggregate supply diagram or model of the economy, illustrate and explain the short-run consequences of the following events upon an economy: The Central Bank within the economy lifts interest rates: There is an increase in private domestic investment spending; An increase in the good and services tax (GST); An appreciation or rise in the foreign exchange rate value of the economy’s currency; A fall in real estate prices in the capital cities of the country (hint: think of the effect upon people’s wealth levels. (2 marks each) Question 12: Assuming that banks choose to maintain a liquidity ratio of 20 per cent and assuming that new cash deposits of $100m are made in the banking system described in the table below: $m $m Banks receive 100 Hold Lend 20 80 Second round deposits rise by Hold Lend Third round deposits rise by Hold Lend Fourth round deposits rise by Hold Lend Fifth round deposits rise by Hold Lend Total deposits after five rounds (a)Complete the above displayed table which shows how credit is created. (5 marks). (b)How much credit will have been created after five rounds? (1 mark)………………….. (c)To what level will total deposits eventually increase? (1 mark)……………………….. (d)Define the bank multiplier. (1 mark)………………………………………………….. (e)What is the bank multiplier in this case? (1 mark) (f)How is it related to the liquidity ratio? (1 mark) THANK YOU
Answered Same DayMay 13, 2021BUECO1509

Answer To: INTERNATIONALISATION, INFORMATION FLOWS AND NETWORKING IN RURAL AND REGIONAL FIRMS: IMPLICATIONS FOR...

Alomita answered on May 18 2021
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INTERNATIONALISATION, INFORMATION FLOWS AND NETWORKING IN RURAL AND REGIONAL FIRMS: IMPLICATIONS FOR REGIONAL DEVELOPMENT
1
PART A (MICROECONOMICS):
Question 1:
    There is no such thing as a ‘free lunch’. Illustrate and explain using a diagram, whether you agree or disagree with this statement?
ans :
There is no such a thing called a ‘ free lunch’ is a popular saying or an expression which describes the cost of decision making and consumption. This expression explains an idea of things that appear to be free are not at all free, they have a cost . This c
oncept, is comparison in economics with the concept of opportunity costs, which states that for every choice or sacrifice made, there is an alternative. Decision-making requires trade-offs and assumes that there are no real free offerings in society. For example, products or the free lunch provided to people are paid by another individual.
price
supply(private cost0
p3
P2

P1
Demand (private benefit)
Social benefit
0 q1 q2 quantity
FIGURE : FREE LUNCH CONCEPT

    Identify the following goods as either public goods or private goods and explain why you think it is so.
    Economic data produced by a government agency that must be paid for before you access and use it;
Ans:
The economic data produced by the government is a private good because its excludable in the sense that it will be available only to those who purchases it from the government,
    Prescription reading glasses
Ans :
The prescription reading glasses is a private good since it is used by those people who require it. Every individual do not require glasses.
    The Defence system
Ans :
The defence system is a public good because it is enjoyed by everyone, it is non excludable good.
    Economic data produced by a government agency that is freely available;
Ans ;
The economic data produced by a government that is freely available is a public good as it does not excludes any body from getting access to it.
    The quarantine system.
Ans :
The quarantine system is a public good as it is not voluntarily excludable.

Question 2:
How will the following changes affect the market price of wheat flour (assuming that the market is initially in equilibrium)? In each case, illustrate with a diagram what happens to the demand and/or supply curves and, as result, what happens to the equilibrium price and equilibrium quantity.
(a)     People consume more bread;
Ans :
Assuming that the market is initially in equilibrium, when people starts consuming more bread, the market price of wheat would rise because of increased demand for wheat for making bread.
    
Price of wheat
S1
P2 e2
P1 e1
D2
D1

0 Q1 Q2 Quantity of wheat
FIGURE 1: DEMAND AND SUPPLY OF WHEAT AFTER INCREASE IN DEMAND
The above figure depicts the scenario when the demand for wheat has risen: e1 is the initial equilibrum , p1 is the initial market price and q1 is the initial quantity. Wheat is an ingrediant required to produce bread. So , when people starts consuming more bread , the initial demand curve, D1 shits to D2, to its right indicating a movement along the supply curve. The new price is p2 and q2 is the new quantity produced and e2 is the new equlibrium point.
(b)     The discovery of a new cheaper way of milling flour;
ANS :
The discovery of new cheaper way of milling flour increases the supply of the wheat.


Price of wheat
S1
S2
P1 E1
P2 E2

D1
0
Q1 Q2 Quantity of wheat
FIGURE 2 : INCREASE IN SUPPLY OF WHEAT
The discovery of a new cheaper way of milling flour increases the supply of wheat since, the producer are now able to sell more quanity of flour at given price, thus , the demand for wheat imcreases. The initual price p1 falls to p2 and the qauntity supplied increases to q2 from q1. E2 is the new equilibrium indicating a movement along the demand curve,.
( c) The prices of other grains rise;
ANS :
When the prices of other grains rises and the price of wheat remains same, the wheat becomes cheaper than the others.
Price of wheat

S1
P2 e2
...
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