Reference no: EM132385321

ECO5000 Economics for Managers

Assignment : Short Answer Questions/Problems 

For problem-solving questions

- critically analysed the problem and articulated a practical solution based on the information provided in the question.

- explained why or how you have developed the solution.

- linked theories and concepts learnt from the book into your answer. This will improve the credibility of your proposed solution.

For mathematical question

- Accurate calculation of the mathematical problem and a valid interpretation of the result.

Question 1

Suppose a manufacturing firm acquired a production technology that can be characterized by a learning curve. Every time the firm increase production by one unit, their costs decrease by 10%. The first unit costs them $284 to produce.

Prepare a manufacturing cost table up to 15 units and calculate the total cost, marginal cost and average cost. If they receive a proposal to produce and sell 10 units, what is the break-even price? Now, what is the new break-even price for 12 units?

Question 2

Assume that the ‘marker pen' market is competitive and includes no transaction costs. Twelve suppliers are willing to sell each pen at the following prices:

$30, $29, $27, $26, $25, $23, $22, $20, $16, $15, $13 and $12.

Twelve buyers are willing to buy one pen at the following prices:

6$, $8, $10, $12, $16, $18, $19, $20, $23, $26, $28 and $29.

Draw the market equilibrium graph. What are the equilibrium price and quantity? If the price is $29, explain whether the market has excess demand or supply? [Hint: apply the law of demand and supply.]

Question 3

On Valentine's Day, the price of roses increases by more than the price of chocolates and greeting cards. Why? [Hint: Consider what makes roses, chocolates and cards different and how that difference might affect supply's responsiveness to price.]

Question 4

Discuss the basic differences between a competitive and a monopoly market. Which market has higher elastic demand in the long run and why?

Question 5

Explain the three basic strategies that the mining industry of Australia should implement to stay one step ahead of the forces of competition, internationally.

Question 6

Explain the effects of the AUD appreciation on:

(1) Exports of Australian goods, the price level of imported goods in Australia and tourism to Australia;

(2) Revenues of Australian financial institutions with South-east Asian trading subsidiaries in Japan (which earn profit in Yen).

Question 7

"People perceive how attractive the price of a consumer good is based on its distance from a reference price"- do you agree with the statement? Explain why or why not.