Economics Assignment

Task 

In this assignment you'll find Task 1: Economic foundations and market forces, which comprises of six (6) questions which you'll answer and submit.

A word count is set for each question (at the end of each question). You must ensure your answer is below the word count. Anything written after the word count has been exceeded will not count towards your answer.

-Related learning outcomes

This assignment assesses the following unit learning outcomes:

1.   Use economic indicators and models to understand and analyse real-world situations.

2.  Use economic concepts and knowledge to understand, explain and evaluate decision making by individuals, firms and government.

3. Describe economic outcomes in markets and how these are affected by market structure and the macroeconomic environment.

4.  Identify appropriate business strategies and government policy to achieve positive outcomes (such as increase profit, reduce market failure, or stabilise macroeconomic fluctuations).

5.Analyse current economic issues and determine/evaluate responses by the relevant economic agents.

Answer the following questions in a Word document. In your Word document, include only the question number, followed by your answer, but do not provide the question itself. You can draw and scan your graphs and then insert the image into your word document.

Task 1: Economic foundations and market forces

Table 1: Number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland.

	One motorcycle	One guitar
Scotland	15 hours	5 hours
Ireland	9 hours	2 hours

Question 1. From the information provided in Table 1, which country has an absolute advantage in the production of motorcycles? Which country has an absolute advantage in the production of guitars? Explain. Approx. number of words: 80.

Question 2. From the information provided in Table 1, what is Ireland's opportunity cost of producing one motorcycle? Explain. What is Scotland's opportunity cost of producing one motorcycle? Explain. Approx. number of words: 80 + calculations.

Answer questions 3, 4 and 5 using the information provided in Table 1-2 below:

Table 1-2: Quantity demanded and supplied for the 'The Theatre Company'

Price ($)	Quantity demanded	Quantity supplied
4	1000	400
8	800	400
12	600	400
16	400	400
20	200	400

Question 3. Draw the demand and supply curves for the 'The Theatre Company'. What are the equilibrium price and quantity of entry tickets? Explain why this is the equilibrium point.  Approx. number of words: 50.

Question 4. Explain, using the graph in Question 3 above, what would happen if the price was initially $4? Identify any surplus or shortage on the graph above.  Approx. number of words: 150.

Question 5. What would happen to the demand curve, supply curve, price and quantity if the theatre was to double its capacity? Draw the new graph and explain.  Approx. number of words: 80. 

Read the following short excerpt and answer Question 6.

The RBA just scotched a theory about younger Australians choosing not to buy a home.

Forget the perception that younger Australians are frivolous with their money, or that they now prefer to rent than buy.

The real thing holding Australian first time buyers back from buying a property is rapidly increasing house prices, says John Simon and Tahlee Stone, economists at the Reserve Bank of Australia (RBA).

Rather than a shift in ownership preferences or demographic changes in the years following the global financial crisis, Simon and Stone acknowledge that higher prices are largely responsible for crowding out prospective first home buyers (FHBs) from the market.

'Our results support the hypothesis that higher housing prices have crowded out potential FHBs from the market,' the pair wrote in a discussion paper released on the RBA’s website today.

Read more: The RBA just scotched a theory about younger Australians choosing to not to buy a home (Links to an external site.)Links to an external site. (Scutt 2017). Link is   https://www.businessinsider.com.au/the-rba-just-scotched-a-popular-theory-about-younger-australians-choosing-to-not-to-buy-a-home-2017-9

Question 6. Using demand and supply analysis, how would the fact that young Australians now prefer to rent than buy change the price and quantity in the housing market (keeping all else constant). Briefly contrast the impact of a change in preference to the counter explanation that it is prices rising that is reducing quantity demanded for housing. Explain. (4 marks) - Approx. number of words: 250. 

Referencing is Harvard.

Referencing

Cauchi, S 2015 Australia cuts 2015 iron ore forecast by 10pc, Sydney Morning Herald, viewed 1 November 2017, < http://www.smh.com.au/business/mining-and-resources/australia-cuts-2015-iron-ore-forecast-by-10-20150630-gi18dp.html#ixzz3tb8IbFdw>.

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