Principles of Economics

Principles of Economics

1
Principles of Economics: ECON11026
Term 1 – 2018
Assessment 2 – Short Answer Questions
Due date: 4 May 2018 (Friday of Week 8) ASSESSMENT
Weighting: 30%
2
Length: Approximately 1500 words (excluding graphs, tables
and reference list)
It is a progressive assignment based on the topics of
weeks 4-6 covering Chapters 5, 6 and 7.
Objectives
This assessment relates to learning outcomes 2 and 3 as listed in the Unit profile.
1. Market structures (6 marks)
Using the IBISWorld database and the market model characteristics, describe the structure, conduct
and performance of the Australian grain growing industry. What market structure does this
industry resemble? As a minimum, you should address:
(a) The structure and key features of the industry
(b) The nature of the product(s) sold
(c) Barriers to entry (if any)
(d) The level of competition and market share concentration of major players (if any)
(e) Short run and long-run profit maximisation process
(f) Comment on the economic efficiency of this market structure and its impact on the
consumer
[This question requires background research. You may access the IBISWorld database from the
library website. See Helpful Hints on p.4 on how to access the database]
2. Market structures (6 marks)
Below are the national market shares of Australian supermarket and grocery stores.
Company Market Share
Woolworths 36.8%
Wesfarmers (Coles) 30.9%
Aldi 8.6%
Metcash (IGA) 7.5%
Others 14.2%
Source: IBISWorld (2017)
(a) Which market structure best describes the Australian supermarket and grocery industry? Why?
(b) Describe the barriers to entry into this market.
(c) What forms of non-price competition do the firms in this market engage in?
(d) Using the kinked demand model, show why firms operating in this type of market are unlikely to
alter output and price drastically. Evaluate the merits and limitations of this market structure from an
economic efficiency perspective.
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3. Market structures (6 marks)
What do you understand about the behaviour of firms operating under the condition of monopolistic
competition? In answering this question, you should, as a minimum, discuss:
(a) The structure of the market place for such firms
(b) Explain how short run losses or profits might arise
(c) Describe the process by which profits or losses are eroded
(d) With examples, explain how the firms in this market engage in non-price
competition.
(e) Briefly describe the limitations of this market structure.
4. Market Failure and Externalities (6 marks)
This question covers the market failures and government policy topic presented in Chapter 7 of the
prescribed text.
‘A 20 per cent tax on sugary drinks is being proposed by Australia’s leading health organisations as
part of a tough new strategy to tackle obesity, which they now say poses a greater risk to the nation
than smoking.’ (Aisha Dow, Sydney Morning Herald, 19 Sep. 2017).
(a) Describe the type of externality caused by excessive consumption of sugary drinks.
(b) What are the private and third-party costs of obesity?
(c) Using a diagram, illustrate the above externality and explain how a sugar tax works.
(d) With examples, briefly describe at least two sources of market failure apart from
externalities.
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ECON11026: Assessment Criteria and Marking Rubric
Student Name:
Criteria Section Marks Total Comments
Q1 (6 marks) (a) 1
Clear explanations and
application of economic theory
and analysis of the real-life
scenario
(b) 1
(c) 1
(d) 1
(e) 1
(f) 1
Q2 (6 marks) (a) 1
Clear explanations and
application of economic theory
and analysis of the real-life
scenario
(b) 1
(c) 1.5
(d) 2.5
Q3 (6 marks) (a) 1
Clear explanations and
application of economic theory
and analysis with real-life
examples
(b) 1
(c) 1.5
(d) 1.5
(e) 1
Q4 (6 marks) (a) 1.5
Clear explanations and
application of economic theory
and analysis of the real-life
scenario
(b) 1.5
(c) 1.5
(d) 1.5
Clarity of presentation, graphs 2
Evidence of research 2
Referencing 2
Total marks 30
Additional Comments:

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Helpful hints for Written Assessment 2
Use the DADA framework when structuring your answers to all questions in economics.
(Definitions: define the key terms; Assumptions: list or make assumptions as required; Diagrams:
draw relevant graphs/tables and explain; and original Analysis: apply the theory to real life economic
examples and explain).
(i) You must read the chapters each week and work on the assignment questions
progressively each week—which will prevent you from asking for extensions and also
submit all assessment task on time to pass the course. So please follow a weekly study
schedule.
(ii) IBISWorld database – Go to the CQU Library webpage àDatabases à Click ‘I’ from the
top menu à Click IBISWorld à Australia Industry Reports à Agriculture, Forestry &
Fishing à Grain Growing in Australia (IBISWorld Industry Report A0149).
(iii) Plagiarism is a real concern, therefore, please remember to reference in-text and also
provide a reference list. Do not give your assignment to anyone or copy from other
students. Please seek help from the Academic Learning Centre staff on paraphrasing and
referencing.
(iv) Concepts and key terms must be defined accurately and completely.
(v) The assumptions upon which the analysis is based must be stated at the outset.
(vi) Diagrams must be drawn properly, correctly labelled and the relations they depict
explained on the diagram and in the accompanying text of your answer.
(vii) Answers must be complete, addressing the specific tasks nominated in the questions.
(viii) Sources must be acknowledged in-text and a list of references provided using the APA
Referencing Style.
(ix) Where a question has more than one part, so too should the answer. Ensure complete
coverage in the analysis section of your answer.
(x) As a minimum, students should reference more than two credible sources.

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