ECO100 Introductory Economics Assignment

General information
This Individual assignment is worth 20 per cent of total assessment
There are 3 questions worth a total of 100 marks. The marks will be converted to a total of 20 marks scale and uploaded onto Moodle for 20 per cent of your total course assessment.

introductory-economics-assignment

FORMAT
1.2 You must follow the appropriate format explained below. Not following the appropriate format will cause a loss of some marks.1.3 Names and ID number of student must be clearly printed on the Assignment Cover Sheet. 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 receive 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.

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Question 1 [50 marks] – ECO100 Introductory Economics Assignment

Australia and Canada have a free trade agreement in which, Australia exports beef to
Canada.
a. Draw a graph and use it to explain and illustrate the impact of trade on
consumers, producers and the Australian economy. [5 marks]
b. Now Canada imposes an import quota on Australian beef. Draw a graph and
explain how this quota would influence the following factors in Canada:

(i)price of beef;

(ii) consumer surplus (CS) and producer surplus (PS);

(iii) beef importers’ gain;

(iv) efficiency of the beef market. [15 marks]

Question 2 [30 marks]

“More than one billion of cups of coffee are consumed in Australia’s cafes, restaurants and
other outlets each year, an increase of 65 per cent over 10 years. People are drinking less
‘instant coffee’ as espresso becomes more popular and new speciality coffee shops have
been popping up all over Australia to satisfy demand for daily caffeine fix. Not only are
people drinking more coffee, they are becoming more coffee-savvy and want premium brew even if it costs more.”

Answer the following questions after reading the news clip above.

a. How would you classify the espresso coffee market; are firms price takers or
price makers? Explain. [4 marks]

b. With the aid of an appropriate economic model, explain why there has been
such an explosion in the number of coffee chains in Australia over the past
ten years. [10 marks]

Question 3 [20 marks]

Suppose the tea market can be described by the following equations:
Demand: P = 10 – Q
Supply: P = Q -4

where p is the price in dollars and Q is the quantity in kilograms.

a. What is the equilibrium price and quantity? [4 marks]

b. Suppose the government grants a subsidy of $1 per kilogram of tea
produced. What will the new equilibrium quantity be? What price will the
buyer pay? What amount per kilogram (including the subsidy) will the seller
receive? What will be the total cost to government? [12 marks]