Reference no: EM13997948

Task - Question

Answer the following:

You have been employed as an Economist to advise the Department of Health and the Federal government about the following issue. What would be the effect of increasing the number of medical operations of those people suffering from cancer related to tobacco smoking? Economics is often referred to as "the science of scarcity". (Hint. Assume the federal health budget is fixed).

Rationale

The question addresses the following learning outcomes:
• be able to apply demand and supply analysis to make a range of market related decisions
• to be able to identify and critically evaluate opportunities for specialization and exchange
• to be able to make decisions that incorporate the relevant benefits and cost analysis

In your working life you will be required to present arguments and explain your decisions. Economics gives you tools to do this. However, many of those with whom you work will have little, if any, understanding of the principles of economics and their application. To communicate with these people you will have to put your arguments succinctly into language that they understand. This does not mean that your argument is any less rigorous or sophisticated. Rather, it means that you are being asked to communicate important concepts and decisions in a manner that most people can understand. We see this as the most important result of your study of this subject and therefore a passing mark (50% to 64% depending on the quality of your answer) on any question will require that you are able to successfully explain to the lay person (one who has not studied economics) the issues associated with any question. Thus in the first part of an answer to any assessment question in this subject you will be required to summarize, in a non-technical manner, the essence of a correct answer.

Of course, you will need to know and understand the relevant theory and associated diagram(s)/model(s) on which you are basing your answer. Thus in the second part of your answer to any question you will be required to correctly outline the basic theory - including the construction and explanation of the diagram(s)/model(s) associated with it. This ability to theorize will indicate your ability to place the issues raised in the question into an appropriate theoretical/abstract context from which to further examine the economic issues and to draw appropriate conclusions. You must correctly utilize the diagram(s)/model(s) to illustrate the changes to the diagram(s)/model(s) that the circumstances discussed in the question imply. This will illustrate your ability to manipulate the tools of economics. Finally you must come to a conclusion, using the diagram(s)/model(s), the impact of the change on variables and issues of concern, determine if a response is required (by business or government), what that response should be and predict the impact of that response in both the short-run and the long-run.

Please note that this is an early task and has been designed to ensure that you are engaging with the subject content on a regular basis.

Part 1

Introduction

Provide in 'everyday language' and without reference to diagrams a summary of a correct answer to the question asked. This summary should include a succinct description of the point from where the analysis commences, the initial impact of the change in economic circumstances discussed in the question, identification of the problem(s)/issue(s) these changes create, the likely business/policy measure(s) taken in reaction to these changes, the short run and long run results of the measure(s) employed and a brief evaluation of the measures taken.

Part 2

Analysis

Complete Part 1 and be able to recognise the correct economic theory and the associated diagram(s)/model(s) for the analysis. Be able to explain the basics of the theory and of the construction of the diagram(s)/model(s) and identify the appropriate equilibrium starting point in the context of the diagram(s)/model(s). Be able to identify the initial change in the diagram(s)/model(s) that results from the change in economic circumstances discussed in the question.

Part 3

Conclusion

Complete Part 2 and using the diagram(s)/model(s) correctly identify the economic problem(s)/benefit(s)/issue(s) created by the change in economic circumstances and analyse if business/government should respond, what the response should be and, if a response is made, analyse the effectiveness of the response by reference to the diagram(s)/model(s) in the short-run and long-run.

Each part should be carefully labelled.