BUECO5903 Business Economics Assignment

Instructions: This assignment contains five questions. You are required to answer all five questions.

This is an individual piece of assessment. Make sure your submission is an original submission, this means it must be the creation of the person submitting it.

You are required to explain your reasoning and use diagrams where appropriate.

Question 1.Using a production possibilities frontier (PPF) diagram, determine how a country's PPF changes in response to the events described below.

Make sure to explicitly indicate what sectors you are representing, and what sort of assumptions each event implies (i.e., a neutral effect vs a sector-biased effect). The latter follows from your assumptions on the factor intensity of the sector you are representing.

1. Reducing skilled migration into the country
2. Imposing import taxes (tariffs) on intermediate inputs
3. Increasing the expenditure on research and development
4. An increase in the retirement age (providing greater flexibility in labor markets)
5. The effects of a natural disaster

Question 2.For each of the events described below, you are required to explain:

1. The market you are evaluating (e.g., labor market, automotive market, etc).
2. Does the event action on the demand side, supply side, or both sides of the market?
3. Does the event lead to a quantity or price change? Or does the event lead to a shift in demand, supply, or both?

Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply (when plotting your demand and supply, describe whether you are assuming an elastic or inelastic demand/supply).

1. A reduction of supply as a consequence of a disruption in the world oil markets
2. The implementation of a minimum wage
3. The implementation of taxes on the manufacturing of cars in Australia
4. The implementation of a Carbon tax in the economy. A Carbon tax is charged according to the level of emissions of greenhouse gases in an economy.
5. The implementation of a new loan program for university students in the education sector.

Question 3.Compare the impact of a recession that reduces consumer income by 10 percent on the consumption of technology goods and house rentals. Suppose that the income elasticity of demand for technology goods is 3 and the income elasticity of demand for house rentals is 0.3. Based on your response, make a policy argument to support through government funding either businesses or house rentals.

Question 4.Using a supply and demand analysis shows first the labor market in equilibrium, and then show

1. The effect of a reduction in the demand for labor as a consequence of a pandemic.
2. The effect of a government subsidy to producers to restore the employment of labor.

Provide a diagram with clear axis details. Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply.

Question 5.Using the following table

1. Construct the cost schedule for a firm operating in the short run
2. Graph the average variable cost, average total cost, and marginal cost curves.