Prices and Markets

Assessment Guidelines

Assessment Task 1

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 quiz needs to be competed between 10 and 14 August 2020. 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?

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

Minimum Waste

Absolute Fairness

Equal Distribution

Equitable Outcome

4. 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.

5. 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

6. 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

7. 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.

8. 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

9. Empiricism is analysis that uses ________ to test theories.

illustrations    philosophy    data    value judgments

10. 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.

Assessment Task 2 (40 marks)

Using the models and theories of either (1) the market or (2) market failure, perform a microeconomic analysis of one appropriate economic issue or phenomenon of your choice. Clearly explain your chosen question, method and conclusions.

Assessment Task 3 (50 marks)

Using the models and theories of either (1) market structure, conduct and performance, (2) game theory or (3) the boundary of the firm, perform a microeconomic analysis of one appropriate economic issue or phenomenon of your choice. Clearly explain your chosen question, method and conclusions. Comment on the link between market structure and performance for your chosen issue.

Assessments tasks 2 and 3 share the same format. Each has limit of 1500 words to be submitted on Canvas by 25 September (assessment task 2) and 23 October 2020 (assessment task 3) respectively. Your submissions should be word processed and contain word count and bibliography. Every percentage point of word count over the limit (not counting bibliography) will result in a percentage point reduction in the assignment mark until it reaches zero. Your submission will receive an automatic Turnitin similarity score that should not exceed 25%. You should check this score using the tool 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.

In both assessments, your task is to conduct economic 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. 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.

  • 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. State the question, why it’s interesting and economically significant. Present facts or data to illustrate.
  • Select the right method (i.e. microeconomic model, theory or tool from this course) to answer your question. Explain your method. Assume your reader needs to be explained every concept needed to follow your analysis.
  • Apply the method to your issue. Report the steps of your analysis and your findings. Typical analysis discusses the economic agents, how they exchange, the equilibrium and factors that change it and finally welfare implications. Use diagrams or models as they answer the question better than only words.
  • Your conclusion will directly answer the question and maybe look at the big picture – the significance and limitations of your work.

Clearly structure your report (depending on topic), for instance using numbered sections for each of the parts of the task, e.g. introduction, model, analysis and conclusion. Introduction and conclusion will normally be shorter. Sample topics, questions relating to them and appropriate methods/analytical tools are given in 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.

We strongly advise you 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 may append a copy this approval email to your submission. 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.You should complete the RMIT micro-credential ‘Managing Time and Priorities’ to help you do this. Note this is will not be part of your grade for this course.

Topic                       Question       Potential Methods

Lecture 3.2.3.   What explains the rise in world coffee prices in 2011?                              Comparative statics

Coffee Prices

Tutorial 3         During the 1993 ‘mad cow disease” or BSE outbreak in the UK, evidence          Comparative statics,

1d. Mad Cow       emerges regarding the dangers of eating beef from infected animals. elasticity, market Disease               Which markets are affected, and what are the effects?         intervention

Tutorial 3          Should Bangalore introduce a ban on building new apartments to         Comparative statics,

2.3. Building Ban   safeguard sustainable urban development? What is the effect on        elasticity, market apartment prices when there is a rise in the city’s population?            intervention

Tutorial 4                                      Analyse rent controls in the Melbourne residential rentals market using an                                                       Comparative statics,

  1. Rent Controls appropriate diagram. Who benefits and who loses out? What is the effect elasticity, market on total surplus? How is the policy affected by demand and supply         intervention elasticity?

Tutorial 4            Australia has a reputation as a hard-drinking culture yet there has been a      Comparative statics,

  1. Alcohol Excise steady decline in alcohol consumption over the past three decades. elasticity, market

Duty                        Government is considering reductions to its relatively high taxes on     intervention, market alcoholic drinks. Which markets are affected, and what are the effects? Is             failure this policy appropriate?

Tutorial 5.1.    Should Victorian taxpayers should pay $60 million annually to host the F1          Comparative statics,

Hosting F1  Australian Grand Prix? Examine the pros and cons.                                                market failure

Tutorial 9                Should governments be worried about Google’s 92% market share for             SCP-paradigm, internet search engines? What interventions, if any, should they adopt? monopoly

Lecture 10.1.4.        What is the effect of the changing shares of mobile phone operating      SCP-paradigm, game

Mobile OS           systems on market performance?     theory market share

Lecture 10.2.1.    Why is coordinating on the same social media app or technological       Game theory coordination        standard difficult for users? What can be done to make their coordination easier?

Lecture 10.3.1.    What is the effect of two large supermarket chains sharing most of the          Game theory Supermarket       Australian grocery market on prices? What factors influence the effect of duopoly          these firms’ interaction on welfare?

11.3.1.            What is the vertical chain for Starbucks Coffee? Has the firm reached its      Transaction cost,

Starbucks’           optimal degree of vertical and horizontal integration? What further scope    vertical and horizontal optimal boundary for (de)integration or diversification exists?    integration

Dear all,

Further specific guideline for assessment task 3:

You have to use the models and theories of either (1) market structure, conduct and performance

(2) game theory  ( SCP-paradigm, game theory)

(3) the boundary of the firm

Perform a microeconomic analysis of one appropriate economic issue or phenomenon of your choice either focusing on a firm (i.g: Starbucks) or industry. Clearly explain your chosen question, method and conclusions. Comment on the link between market structure and performance for your chosen issue. General guideline is attached.

Please have a look at the sample questions pattern:

:

Please, take a note that you don’t need to send the research questions for assessment task-3. However, make sure you are writing a good quality economic report following guidelines.

General issues should include like as below:

  • Market structure
  • Relevant product (if any)
  • Pricing strategy
  • Tax or government  issue/ best outcome for society etc
  • Your recommendation (if any)
  • You are  most welcome to explain drawing economic graph /diagram

 

Formatting is important. The report should be well written and formatted following the recommendations as below;

The cover page should include name, ID, course name and instructor’s name (You can use RMIT cover page also).

The report should not exceed 1,500 words (without any leeway). This excludes the table of content and reference list.

The document should be formatted following the guideline below and the RMIT presentation guidelines:

o   Text should be justified

o   1.5 line spacing

o   Character size 12 points font, Times New Roman,   1” margins.

References should be presented using the Harvard (author-date) referencing A copy of the referencing and presentation guidelines is available at

http://mams.rmit.edu.au/s9sx559hurvc.rtf