Reference no: EM132592944 , Length: word count:1500

Introduction to Economics - Report: The economic way of thinking

Assessment
The purpose of this assessment is for student to describe and explain the major economic concepts, systems and mechanisms.

The assessment will cover study of topic 1 and student learning outcome 1. Your response must be presented in a report format as noted in the marking rubric at the end of this document.

This assessment is based on hypothetical examples, where student takes on the role of management trainee responsible for recommending relevant solutions to each problem. Student is presented with different scenarios and is required to answer the questions that follow.

Task
Review each of the scenarios and answer the questions that follow.

Scenario I
Jim Smith is the Revenue Manager (RM) of the hotel. Reviewing the hotel's historical trends indicate the property normally sells 85% of its 200 rooms during Easter Saturday at an average daily rate (ADR) of $175.00. The marginal costs of selling his rooms are $80.00 per room. There has been a request from a corporate client for group booking of 100 rooms on the same night @ $125/night, which obviously is significantly less than the ADR of $175.00. However, the Front Office Manager mentions to the RM if they were to accept the group booking, the remaining 100 rooms could be sold to transient guest at ADR of $175.00.
1. If you were to make a decision based purely on a rational choice, what will be your advice to the RM? Should the property accept sale of 85% of rooms at an ADR of $175.00 or consider taking corporate group booking? You must clearly show the working of net income after considering the revenue and marginal costs for both options.
2. What are the opportunity costs and trade-offs of choosing one option over the other?
3. What will be your final recommendation and how will this represent most effective use of hotel's scarce resources?

Scenario II

The restaurant manager of the hotel is confronted with making an economic choice on its two menu items. Below are the production possibilities on the two comparative items provided by the chef. The selling price of each product is also provided.

1. Explain if this an example of constant or increasing opportunity cost production possibilities? Support your response by sighting opportunity costs and trade-offs at any two points of production. Demonstrate this visually by drawing a production possibility curve.

2. Explain at what point the restaurant can realise the optimal revenue and most efficient usage of resources. Ensure that you clearly note calculation of revenue and number of dishes produced. Indicate this point on the PPC as well by placing the letter ‘X'.

3. Discuss the strategies for restaurant in shifting the PPC outwards. You must provide specific examples as relevant to the scenario.

Scenario III
The GM of the Hotel is considering the possible consequences of a recent decision by the Australian Government announcing an increase in minimum wages (May 2019). In answering the below questions, read the provided article ‘Scenario III article' available in the Assessment 1 section of the Learn course for this subject. The article is based on ‘Minimum wage rise of 3% to $740.80 a week on fair working ruling' and undertake further research that can assist in strengthening your response.

1. Why must government intervene to set minimum wages? How these wage increases may impact labour market and economic growth?

2. Consider the circular flow matrix and explain the significance of labour market. That is how does the economy function and how firms and households are reliant on each other?

3. Explain how availability of information differs within different economic systems and how does information assist in more efficient use of resources. Support your answer with relevant example/s.

Attachment:- Hospitality and Events Management.rar