Answer four (4) questions. Maximum of 400 words for each question. These are questions which require short answers to a series of issues relating to economic principles and concepts.
[2.5 mark for each sub question; Total 5 marks]
- What happen with firm’s price and revenue operating in competitive market if the firm doubles the amount of output it sells?
- Explain characteristics of public goods and common resources with examples.
[2.5 marks for each sub question; Total 5 marks]
- Define barriers to entry. Give two examples of monopolies that you know something about and explain what types of barriers to entry enable them to maintain their monopoly.
- What are the four principles of economic decision making?
[1 mark for each sub question; Total 5 marks]
Consider the market for Coca Cola. Analyse the effect on equilibrium price and equilibrium quantity of each of the following. Consider each separately and use a separate diagram for each.
i) Coca Cola cuts its price by 10%
ii) Soft drink industry introduces cost saving technology
iii) Advertising campaign states that Pepsi (a substitute for Coca Cola) reduces tooth decay
iv) 10% increase in the cost of ingredients of soft drinks
v) Average Aust incomes increase by 10%
[Total 5 marks]
You are an economist advising Holden Australia about increasing their total revenue. How would knowledge of elasticity help you to make the correct decision?
The purpose of this assessment is to ensure that you have mastered the micro economic concepts and tools covered elating to what is economics, demand and supply, elasticity and market structures. : be able to apply economic concepts and principles to daily life; be able to explain the economic decision making of producers and consumers and their interaction in the market place; be able to construct graphs and diagrams to demonstrate how economic concepts and principles work in practice.