ECON1025 – Semester 2 2021

Prices and Markets Assessment Guidelines Professor Robert Hoffmann

Assessment Task 1: Online Quiz (10%) Assessment Task 2: Microeconomic Analysis Report (40%) Assessment Task 3: Microeconomic Case Analyses (50%)

Assessment Task 1: Online Quiz (10%)

This is a multiple choice quiz worth 10 marks. It is based on all the material from weeks 1-3 (lectures and tutorials). You must access and complete it on Canvas. The quiz will consist of 10 questions and you have 60 minutes to complete it. All questions are equally weighted. There is no negative marking (where a wrong answer loses you marks). You will get one attempt at this quiz. You will not be able to to go back to a previous question once you submitted your answer to it. The below quiz and the weekly tutorial quizzes provide some guidance as to what the assessment task 1 will look like in terms of format and type of questions.

Sample Quiz

  1. Based on the table below, using the midpoint formula, what is the income elasticity of demand for good X?

-3.5 -0.29 0.29 3.5

  1. Which of the following statements is not correct, based on the figure below?

When the price is $10, quantity supplied equals quantity demanded. When the price is $6, there is a surplus of 8 units When the price is $12, there is a surplus of 4 units. When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

  1. Which of the following phrases best captures the notion of efficiency?

Minimum Waste Absolute Fairness Equal Distribution Equitable Outcome

Income Q of X Purchased

$30,000 2

$40,000 6

  1. Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity cost of producing baseball bats is lower than Tom’s opportunity cost of producing baseball bats, then

Tom must have an absolute advantage in the production of baseball bats. Jim must have an absolute advantage in the production of baseball bats. Tom has a comparative advantage in the production of baseball bats. Jim has a comparative advantage in the production of baseball bats.

  1. The cross-price elasticity of demand between Kit Kat and Mars is negative. Based on this information alone, we can conclude the two products are substitutes

True False

  1. Economics is primarily the study of

the state, nation, government, and politics and policies of governments the problems related to the existence and evolution of society how agents choose to allocate scarce resources and how these choices affect society the mental functions and behaviour of individuals and groups

  1. Which of the following statements correctly highlights the difference between microeconomics and macroeconomics?

Microeconomics deals with a small part of the economy, whereas macroeconomics deals with aggregate economic performance. Microeconomics describes what economic agents actually do, whereas macroeconomics describes what economic agents ought to do. Microeconomics primarily deals with positive analysis, whereas macroeconomics primarily deals with normative analysis. Microeconomics is descriptive, whereas macroeconomics is advisory.

  1. Which of the following best describes equilibrium?

A stable situation where no economic agent would benefit by changing his or her behaviour A situation where economic agents do not optimise as they do not have perfect information A situation where only one individual or firm makes an optimal decision A situation where the government intervenes to allocate resources

  1. Empiricism is analysis that uses __ to test theories.

illustrations philosophy data value judgments

  1. Which of the following is an example of a positive economic statement?

An increase in income causes an increase in savings. Eliminating poverty is more important than reducing inflation. Economics is the most useful social science. The government should ideally work as a welfare state.

Answers: 1D;2B;3A;4D;5FALSE;6C;7A;8A;9C;10A.

Assessment Task 2: Microeconomic Report (40%) Using models and theories of either (1) the market or (2) market failure (i.e. only material from lectures 2 to 6), perform a microeconomic analysis of one specific appropriate issue or phenomenon of your choice. Clearly explain your chosen question, method and conclusions.

Assessments task 2 has limit of 1500 words to be submitted on Canvas. Your submissions should be word processed (i.e. produced using a program such as Microsoft Word) and contain word count and bibliography. There are no specific requirements for font size or typeface, spacing or margins other than that your document should be easy to read. You also do not need an executive summary or other elements not specifically mentioned here. For every 10% word count (counting everything but the bibliography) over the limit you will lose 10% of the assignment marks until it reaches zero. There is no discretionary margin above this limit. There is no minimum but you are advised to use all the words allowed to allow for a more developed and detailed analysis.

Your submission will receive an automatic Turnitin similarity score that should not exceed 25%. You should check this score using the tool on Canvas before submitting. Exceeding this limit raises the risk of your submission being subject to an academic integrity process. As per University regulations late assignments receive a 10% penalty per day until the mark reaches zero. Marks will be given according to the rubrics on Canvas. You must attach a completed coversheet with your submission (template appended below).

Your task is to conduct microeconomic analysis of an issue that you select yourself, just as businesspeople and policymakers do. You will be assessed on what you learnt in the course by correctly choosing and applying definitions, methods and theories from lectures and tutorials 2-6. As this is a microeconomics assignment you should not write a general or journalistic report or use concepts from other courses not discussed in this course, including macroeconomics.

Clearly structure your report (depending on topic), for instance using numbered sections for each of the parts of the task, e.g. introduction, concepts, model, analysis and conclusion. Introduction and conclusion will normally be shorter. The length of individual sections could reflect their weights in the grading shown in the rubric below. Sample topics, questions relating to them and appropriate methods/analytical tools are given in

Assessment 2 Steps

1 Choose topic and question

Look at the business and economics news for ideas for an appropriate issue. It needs to fit the purpose of microeconomics (lecture 1) – a topical, important example of resource allocation with questions you can answer by applying microeconomic methods from the lectures relevant to the assignment. State the question, why it’s interesting and economically significant. Present facts or descriptive data to illustrate. The issue needs to be a specific (topical or historical) case. This means you will discuss a specific market for a product, service or factor of production in a specific context rather than a general economic issue or problem. Also make sure your topic does not fall within macroeconomics, which is not covered in this course.

2 Select your methods (concepts and models)

Select the right method (i.e. microeconomic model, theory or tool from lectures and tutorials 2-6 to answer your question.

3 Explain your concepts and models

Explain your method. Assume your reader needs to be explained every concept and model needed to follow your analysis, as if you are teaching your reader these.

4 Analyse your topic

Apply the method to your issue. Report the different steps of your analysis and your findings. Typical analysis applies the tools from the relevant lectures to your specific case. Use relevant diagrams or models as they answer the question better than only words. If your chosen method comes with such models (e.g. diagrams or graphs), not using these in your assignment will result in a significant loss in marks.

5 Conclude Your conclusion will directly answer the question and maybe look at the big picture – the significance and limitations of your work. Provide answer to questions like: What have we learnt from your analysis for business or government policy? So what?

the table below. They are taken from lectures and the tutorial questions you tackled in class. Please do not use these or indeed any examples from classes as choosing an original topic and analytic tool by yourself is part of the assessment. These and other cases discussed in lectures and tutorials give you an idea of how to complete this assignment.

You are required to send your tutor a short email with a short summary your chosen topic and questions (please do not send full drafts) for approval at least two weeks before the deadline. You must append a copy your tutor’s approval email to your submission. Failure to do so will result in a grade deduction of 5%. It will be your responsibility to ensure you completed your assessment in good time. Managing this project and your time will be critical for your success.

In addition to this document, guidance for assignment 2 is available from: (1) a video that contains important guidance on report writing in economics, (2) a tutorial devoted to the assignments, (3) the email exchange with your tutor and (4) the weekly consultation hours with the course coordinator. Also, examples of the kind of analysis you are required to do is contained in the relevant lectures (see table below). Note that we do not provide a template or model answer. The reason is twofold: Part of the assignment is to develop your independent thinking and research. Providing a model answer encourages a “painting-by-numbers” approach that is inappropriate for a university education and will not make you an independent thinker, and will not sufficiently prepare you for work life where no templates exist. Also, there is considerable scope to tailor your assignment (within the requirements above) based on your own style, chosen topic and method.

Sample Assessment 2 Topics from Lectures and Tutorials (DO NOT USE – FOR ILLUSTRATION ONLY)

Topic Question Potential Methods (concepts and models)

Lecture 3.2.3. Coffee Prices

What explains the rise in world coffee prices in 2011? Comparative statics

Tutorial 3 1b. Building Ban

Should Bangalore introduce a ban on building new apartments to safeguard sustainable urban development? What is the effect on apartment prices when there is a rise in the city’s population?

Comparative statics, elasticity, market intervention

Tutorial 3 1d. Mad Cow Disease

During the 1993 ‘mad cow disease” or BSE outbreak in the UK, evidence emerges regarding the dangers of eating beef from infected animals. Which markets are affected, and what are the effects?

Comparative statics, elasticity, market intervention

Tutorial 4 1. Rent Controls

Analyse rent controls in the Melbourne residential rentals market using an appropriate diagram. Who benefits and who loses out? What is the effect on total surplus? How is the policy affected by demand and supply elasticity?

Comparative statics, elasticity, market intervention

Tutorial 4 3. Alcohol Excise Duty

Australia has a reputation as a hard-drinking culture yet there has been a steady decline in alcohol consumption over the past three decades. Government is considering reductions to its relatively high taxes on alcoholic drinks. Which markets are affected, and what are the effects? Is this policy appropriate?

Comparative statics, elasticity, market intervention, market failure

Tutorial 5.1. Hosting F1

Should Victorian taxpayers should pay $60 million annually to host the F1 Australian Grand Prix? Examine the pros and cons.

Comparative statics, market failure

Assessment 2 Cover Sheet Prices and Markets Student Name

Student ID

Tutor/Local Lecturer


Please tick all the applicable boxes below. Note that failing to comply with any of the requirements below may results in deductions from your grade for this assignment.

I have read and followed the guidelines for this assignment, watched the assignment video and took the assignment guidance quiz. ☐ I have discussed my topic with my local lecturer/tutor and I have appended any email correspondence approving my chosen topic. ☐ The topic I have chosen is my own original topic and was not discussed in lectures or tutorials. ☐ The topic I chose is not macroeconomics but microeconomics and is appropriate for analysis using the tools introduced in those lectures of this course relevant to this assignment. ☐ My work contains both explanation and use (in analysis) of relevant microeconomic models. ☐ The tools I have used to analyse the topic are exclusively from relevant lectures of this course, i.e. the market, market failure (lectures 2-6). ☐ The word count does not exceed 1500 words (excluding bibliography, title page and text in diagrams). I understand there is no discretionary margin allowed above this number and that there is no minimum allowed number of words.

☐ The work is my own and all sources I used to inform me are referenced and appear in the bibliography. ☐ I have checked the Turnitin score for my work and it is acceptable (i.e. <25%). ☐ I have submitted this work by the submission deadline. ☐ I have checked that I have uploaded the correct file and the correct version of this file. ☐

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