MICROECONOMICS

BUS102Group Assignment T317

BUS102 Microeconomics T317, Group Assignment due 20 January 2018 Page 1

BUS102 Introduction to Microeconomics

Questions, Notes & Guideline for Group Assignment

Due 11:59pm, Saturday 20 January 2018

Three Problem-Solving Questions that require written answers
1. General information

1.1 This group assignment is worth 20 per cent of total assessment and is to be submitted by
11:59pm, Saturday 20 January 2018.

 There are 4 questions worth 100 marks. Attempt all 4 questions.

 The marks will be converted to a total of 100 marks scale and uploaded onto Moodle for
20 per cent of your total course assessment.

 A hard copy of the assignment must be submitted to KOI Librarian in Kent street campus
by 3.00pm, Saturday 20 January 2018. You must keep the receipt after the submission for
your own record. You are also required to upload an electronic copy of the assignment in
Moodle Turnitin by 11:59:00pm Saturday 20 January 2018.

 Late submission will attract loss of 4 marks out of 20 marks (20 per cent), and any
assignment submitted to the library after 5:00pm Monday 23 January 2018 will not be
accepted.

1.2 This assignment is a group assignment and each group must contain only two (2) people.

1.3 Names and ID numbers of students in the group must be clearly printed on the Assignment
Cover Sheet. A member, who has not contributed to the discussion and assignment, must be
marked as “Not contributed” in a bracket following the student’s name and ID.

1.4 You must follow the appropriate format explained below. Not following the appropriate
format will cause a loss of some marks.

 All written answers must be clearly typed and printed. Hand-written answers will NOT be
accepted.

 All assignment questions and sub-questions must be typed in order at the heading.

 Answer each question on a different page. For example, if Question 1 (a) (b) (c) and (d)
are answered on pages 1-2, then start Question 2 on page 3, etc.

 You must analyse, explain and show how and why you reached your answers. Providing
just answers without explanation will not receive full marks.

BUS102 Group Assignment T317

BUS102 Microeconomics T317, Group Assignment due 20 January 2018 Page 2

 You must also draw and include appropriate and relevant graphs and tables together in
your explanation. Draw them using Microsoft Power Point/Word/Excel, NOT hand-drawn.

1.5 Copying the assignment contents from other group assignment is a serious violation of copy
right. It will be penalized and will attract a VERY heavy loss of marks – “Fail”.

 Please remember that it is not difficult to identify the contents that are copied from other
group(s). Write the answers in your own English words.

 Please DO NOT SHOW work students in other groups. If you did, both the person who
showed the assignment and the one who copied the assignment will be awarded zero
out of 20 marks.

1.6 Each group must have a coordinator, who will submit a hard copy of the assignment to the
KOI librarian and also upload an electronic copy of the assignment in Moodle Turnitin. Only
ONE COPY of the assignment from each group is required to be submitted (& uploaded) by
the coordinator of the group.

1.7 Make sure you discuss and work together for ALL FOUR questions. You MUST read and check
the assignment before submission, once completed.

BUS102 Group Assignment T317

BUS102 Microeconomics T317, Group Assignment due 20 January 2018 Page 3

Question 1: 40 marks

1. Australia has signed a free trade agreement with Canada in which Australia would export
beef to Canada.

(a) Suppose that the government decides to subsidise exports of beef by paying a certain amount
for each kg sold overseas. How does this export subsidy affect the domestic price of beef, the
quantity of beef produced, the quantity of beef demanded, and the quantity of beef exported?
[10 marks]

(b) How does it affect consumer surplus, producer surplus, total surplus and government revenue?
Illustrate your answer with a supply and demand diagram. [10 marks]

(c) Suppose Canada imposed an import quota on Australian beef. Draw a graph and explain how
this quota would influence the consumer prices of beef in Canada, consumer surplus (CS) and
producer surplus (PS), benefits of beef importers, and the amount of deadweight loss in Canada.
[10 marks]

(d) State and discuss two arguments that could be advanced in support of trade protection. [ 10
marks]

Question 2: – 10 marks

Table 1: Production and Marginal Cost

Quantity (Q) Marginal Cost (MC)

1 20

2 30

3 50

4 80

Use the production and marginal cost information in table 1 of a firm in a competitive industry to
answer the following questions.

(a) If the market price is 40, calculate the producer’s surplus when Q = 2 [5 marks]

(b) If the market price is 60, calculate producer’s surplus when Q=3 [5 marks]

BUS102 Group Assignment T317

BUS102 Microeconomics T317, Group Assignment due 20 January 2018 Page 4

Question 3 [20 MARKS]
Use the demand and supply functions expressed by equations (1) and (2) below to answer parts (a) –
(d).

The orange market is perfectly competitive, and the demand and supply functions are:

Q
D
= 200 -2P (1)

Q

S
= -10 + P (2)

where P is price dollars ($) and Q is the quantity kilogrammes

(a) Write down the inverse demand and inverse supply curves [5 marks]

(b) Using your results in part (a) draw the supply and demand diagram. Correctly label the
diagram. [5 marks]

(c) Calculate the equilibrium quantity and price of oranges, and indicate your results on the

diagram in part (b). [5 marks]

(d) Calculate consumer surplus, producer surplus and total surplus, and indicate your results on
the diagram in part (b). [5 marks]

Question 4: – 30 marks

In 2010, the Australian government imposed a tax on Alcopops to reduce teenage binge
drinking and alcohol-related harms and hospitalization, and also to raise tax revenue.
However, by the end of the financial year no reductions in teenage binge drinking and
alcohol-related harm were recorded and, moreover, the revenue raised from the tax was 6%
less than predicted.

(a) As an economist, are you surprised about the outcome of the government’s tax policy?
Critically discuss. Use the demand and supply model and other appropriate microeconomic
tools you have learned in this unit to illustrate your argument. [15 MARKS]

(b) Who bore a greater burden of the tax, the buyers or sellers of Alcopops? Was the outcome
of the tax efficient? [7 MARKS]

(c) What other policy could the government implement to reduce teenage binge drinking and

alcohol-related harm and hospitalization? Explain. [ 8 MARKS]

End OF THE ASSIGNMENT