Microsoft Word - AF1605_Written Assignment 2_Questions_(202122S2).docx 1 AF1605 Introduction to Economics Written Assignment 2 Second Semester, XXXXXXXXXX Instructions: Ø The nominal full mark for...

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Microsoft Word - AF1605_Written Assignment 2_Questions_(202122S2).docx
1
AF1605 Introduction to Economics
Written Assignment 2
Second Semester, XXXXXXXXXX

Instructions:
Ø The nominal full mark for this assignment is 40, while it ca
ies 20% of the overall course total.
Ø A Word document containing the template for the cover page is provided. Please fill in the information
and type all your answers in the pages that follow.
Ø Please type all your words for Turnitin checking, yet you may hand-draw or use computer tools to draw
diagrams to be included as part of your explanations.
Ø Do NOT include the questions in your answer file to avoid an unnecessarily high similarity index.
Ø Follow the word limit in answering each question. State the number of words after each part.
Ø Besides course materials, you may make reference to other publications and reliable information from
the Internet to answer the questions. However, you should only make references to facts (including data)
and definitions. Your arguments should be written by yourself.
Ø In principle, you should include the source of reference for any points not appeared in course materials
or from your own thinking. APA style is used in Economics and Business fields.
(https:
elc.polyu.edu.hk
eferencing/APA.aspx)
Ø You should complete this assignment without any help from other people.
Ø Posting questions to or adopting answers from online homework-help services or websites are
strictly prohibited.
Ø Plagiarism will be heavily penalized. You should not copy existing published or online materials (unless
they are formal definitions) or your classmates’ answers.
Ø Your submission will be checked by Turnitin against plagiarism after you have submitted it to the lecture
Blackboard site. The similarity index should not be above 30%. Note that the similarity index may
ise some time after your submission as Turnitin reruns to check for similarity to your classmates’ work.
Ø Cases with similarity higher than 30% will be examined on a case-by-case basis.
Ø Please make use of the knowledge learned from this course as the basis of your answers.
Ø Please use complete sentences and organized paragraphs to answer the questions. (Do not answer in
point form.) Include any tables, equations and diagrams that help to explain your answers.
Ø The deadline for submission is at 9pm on 3 May 2022 (Tuesday), Hong Kong Time.
Ø Please make sure the file you submit before the deadline is the co
ect and complete file. Any
esubmission of the “right” version of the file after the deadline will be taken as late.
Ø Please submit your answers to your Lecture Blackboard site (AF1605_20212_A).
Ø Marks will be deducted for late submissions. (4 marks per day). No submission will be accepted
after 9pm on May 7, 2022.
Ø Please pay attention to your email and Lecture Blackboard site for any urgent amendments to this
assignment.
2
There are FOUR questions in this written assignment.
Question 1 (8 marks)
Use the concepts introduced in Topic 6 to discuss how you understand the crisis the world is facing
egarding greenhouse gas emission and global climate change. Explain in what ways there is market
failure and explain why the free-market outcome is not allocative efficient. Also, explain what kinds
of remedies are in place, or you would suggest implementing, to alleviate the related problems. Real-
life information (reference to news and data) that can support your answers are highly encouraged.
Include appropriate diagram(s).
Please answer this question within 350 words. (8 marks)
Question 2 (8 marks)
Home-use antigen test for COVID-19 becomes more popular in Hong Kong in the recent fifth-round
out
eak with the Omicron variant. In late Fe
uary, Hong Kong government started to recognize a
positive result of this type of test as a valid positive. In early April, Hong Kong government gives
every household twenty COVID-19 antigen test kits for free. The prices of different
ands of COVID-
19 antigen test kits dropped substantially (some even more than by half) in April. Recently, the Hong
Kong government announced that all primary school and secondary school teachers and students are
equired to take the antigen test before they go to school, starting from late April.
(a) What market structure do you think the home-use COVID-19 antigen test-kits market is the
closest to? Do you think the firms producing these kits will make good profit from producing
this product in the long run (before people no longer need to use it)? Explain your answers
iefly. Please answer within 100 words. (3 marks)
(b) If you are a secondary school teacher or student, do you think it is now (April) a good time to
uy more COVID-19 test kits for use in the next three months or to buy them later? Do you
expect the price to increase or decrease in the next three months based on your prediction of
possible development? Explain your rationale. Please answer within 250 words. (5 marks)
(Note: If you are a non-local student not living in Hong Kong and find it difficult to fully
understand the situation in Hong Kong, you can answer the above questions instead about the
market structure and prediction on price of the country
egion/city you are from. If so, please
specify which country
egion/city you are refe
ing to.)
3
Question 3 (10 marks)
Based on the following recommended articles or other articles from reliable sources about
cryptocu
ency, answer the following questions:
(a) One major motive of creating cryptocu
ency is to allow a decentralized medium of electronic
payment. In what sense the cu
ent form of cryptocu
ency is decentralized? (2 marks)
(b) Cu
ently, can cryptocu
ency perform the three functions of money. Explain
iefly. (6 marks)
(c) Do you want to buy cryptocu
ency for transaction or financial investment? Explain
iefly. (2
marks)
Your answer should be kept within 300 words in total for this question.
(Note: Write in your own words with suitable paraphrasing to avoid plagiarism.)
Recommended articles:
Ashford, Kate and Schmidt, John, (2022) “What is Cryptocu
ency?” Fo
es Advisor.
https:
www.fo
es.com/adviso
investing/what-is-cryptocu
ency/
Scott A. Wolla, (2018) "Bitcoin: Money or Financial Investment?" Page One Economics, March
2018.
https:
esearch.stlouisfed.org/publications/page1-econ/2018/03/01
itcoin-money-or-financial-
investment/
Siripurapu, Anshu (2021) “Cryptocu
encies, Digital Dollars, and the Future of Money”
Backgronder, The Council on Foreign Relations.
https:
www.cfr.org
ackgrounde
cryptocu
encies-digital-dollars-and-future-money
Question 4 (14 marks)
Please answer the following questions. The three questions are not connected.
(a) In the press release of the Hong Kong Census and Statistics Department on the statistics of
Retail Sales in Hong Kong for January 2022 1 , it stated that, “Local consumer spending
normally attains a seasonal high before the [Lunar New Year] Festival. As the Lunar New Year
fell on Fe
uary 1 this year but on Fe
uary 12 last year, the year-on-year comparison of the
figures for January 2022 with those for January 2021 might have been affected by this factor
to a certain extent.” Explain why and how it would be affected within 100 words. (3 marks)

1 Hong Kong Census and Statistics Department (2022) “Provisional statistics of retail sales for January 2022 [4 Mar
2022]”. https:
www.censtatd.gov.hk/en/press_release_detail.html?id=5019
4
(b) When does a continuous optimism towards future production and income by investors and
consumers become self-fulfilling and lead to a prolonged high economic growth? Explain using
the AD-AS model introduced in this course. Please answer within 200 words with appropriate
diagrams. (4 marks)
(c) From 2021, disruption in supply chain and increasing oil price have
ought about high
inflation and slower recovery of GDP growth rate from the pandemic for many economies. The
ecent war in Ukraine and sanctions against Russia is likely to prolong this problem and worsen
the situation. Using the AD-AS model you have learned in this course, explain the situation.
Also, discuss what kinds of government macroeconomic policy are appropriate to improve the
situation, or if there is a dilemma. Please answer within 300 words with appropriate diagrams.
(7 marks)


END
Answered 5 days AfterApr 23, 2022

Answer To : Microsoft Word - AF1605_Written Assignment 2_Questions_(202122S2).docx 1 AF1605 Introduction to...

Komalavalli answered on Apr 29 2022
17 Votes
Question 1:
Market failure in economics is defined as inefficient distribution of commodities and services in a free market. Individual incentives for rational behaviour do not result in rational outcomes for the collective in the case of market failure. In other words, everyone takes the best judgments for him
self, but the aggregate suffers as a result of those decisions. In traditional microeconomics, this is known as a steady-state imbalance, and it occurs when the amount given does not equal the quantity required. The bulk of the effects of emissions are felt by future generations or persons living in developing nations, implying that those responsible for emissions do not bear the repercussions. As a result, the suffering produced by greenhouse gases resides outside of the economy, making it only morally, rather than commercially, for businesses and consumers to reduce their emissions. The market is collapsing as a result of greenhouse gas overproduction.
So the green house gas emission is negative externality which is affecting the all nation i
espective of seeing which nation is responsible for more emission. Other market failures are accompanied by external greenhouse gas externalities, such as market failures caused by a lack of information about how to cut emissions, network effects, and a lack of incentives for innovation.
Source :United states Environmental Protection Agency
From the above graphs we can say that the substance contribute majorly for GHG emission is ca
on dioxide (CO2).Based on the source of CO2 emission in US transportation and electricity sector emits high. In order to reduce the GHG emission we should address command and control policy method to reduce emission and all the stakeholders should be aware of cost effective way to minimize the emission from both transport and electricity sector. This can be done by creating and encouraging the stakeholders adopts the socially efficient technology and also attracting them to use this technology by providing some incentives. As a result it might help in future to reduce the co2 emission by reducing the demand for goods that are more socially inefficient in reducing GHG. (342)
Question 2:
a)
A market controlled by a few enterprises is refe
ed to as an oligopoly. In this business, there are a few companies that sell the same or separate things. Furthermore, because the market has a limited number of sellers, each seller impacts the conduct of other businesses, which in turn influences the behavior of other firms. I think the market structure for antigen test is close to oligopoly because there are few firms which supply the kit and there are entry ba
iers due to high cost. In long run this market structure becomes perfect competition so they will earn zero profit in long run.(100)
)
Cu
ently the demand for the kits is high because of school opening. All the students and teacher would require the kit to test for covid19 at home. This creates a demand and supply gap, which leads to increase in price cu
ently. The antigen detection business has skyrocketed since Chinese officials permitted the...
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