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ECON6002 Economic Principles and Decision Making Assignment - Laureate International Universities, Australia
Learning Outcomes -
1. Interpret and successfully apply economic concepts of supply and demand for effective organisational problem solving.
2. Apply quantitative and qualitative reasoning to business variables including demand, supply, production and costs. Calculation of costs for a better understanding of concepts surrounding the theory of firm.
Instructions: Provide written answers to the following 2 problems. Discuss and explain sufficiently.
You will complete the answers at the each of each module; You may submit the answers for both the modules together as a single word document.
Module 1 -
1) For an individual who earns $250 per week, cheaper food options could be noodles. However, suppose the same individual gets a better employment and his income increases, will the demand for noodles still be the same; explain the relevant concepts with appropriate diagram(s).
2) What is Production Possibility frontier (PPF)?; what are the concepts that are covered by PPF?; use the table below to represent PPF diagrammatically and explain your diagram.
|
Choice
|
Roadsters per day
|
Convertibles per day
|
|
A
|
800
|
0
|
|
B
|
600
|
400
|
|
C
|
400
|
500
|
|
D
|
200
|
575
|
|
E
|
0
|
600
|
Module 2 -
1) Given the Total Revenue (TR) for a certain firm is A$150,000, calculate Accounting profit and economic profit by stating the formula for both the calculations. Is the firm is financially sound? Substantiate your answer.
|
Expenses
|
Explicit cost (in A$)
|
Implicit cost (in A$)
|
|
Raw Materials
|
20,000
|
|
|
Wages
|
50,000
|
|
|
Rent
|
10,000
|
|
|
Electricity
|
5000
|
|
|
Interest on machinery
|
25,000
|
|
|
Foregone Pay
|
|
50,000
|
|
Foregone Interest
|
|
5,000
|
|
Foregone Rent
|
|
25,000
|
2) The Roads and Maritime Services (RMS) here in New South Wales insists that vehicles which are over 7 years old should be taken for an inspection before renewal of registration for the next year. This is mainly to ensure the vehicle is road worthy. Analyze the type of externality behind this example using relevant diagrams to support your argument.