Subject Code & Title :- ECO100 Introduction To Economics
Weighting :- 20%
Assessment purpose :-
This assessment is designed to allow students to demonstrate their understanding of fundamental economic principles and tools and apply them to the solution of problems in business government and individual behaviour. This assessment contributes to Learning Outcomes a, b, and d.
Assessment topic:
Problem-solving exercises and short report writing in Economics
ECO100 Introduction To Economics Assignment
Task details :-
QUESTION 1: 35 marks; Word Limit: 400 words
The demand for and supply of cashew nuts in Ghana are respectively given by
Where P is price in dollars per kg, and Q is the quantity of cashew nuts.
a. Using equations (1) and (2) draw the demand and supply diagram of cashew nuts. Correctly label the diagram.
(i) Find the equilibrium price and quantity of cashew nuts.
b. To encourage the consumption of cashew nuts because of its nutrition properties the government passed a price regulation law by which the price of cashew nuts was set at $18 per kg.
i. Briefly explain the type of price regulation policy the government introduced.
ii. Calculate the quantities of cashew nuts demanded and supplied under the price regulation policy.
iii. Write a brief comment about how the quantity demanded compares with the quantity suppled and the efficiency of the cashew market after the price regulation policy.
c. One year after the price regulation, the government allowed the importation of cashew nuts and imposed a tariff (tax) of $1 per kg of cashew nuts imported.
i. Determine the quantities produced by domestic firms and purchased by domestic consumers Show them on the diagram
ii. How much tariff (tax) revenue did the government collect.
iii. Calculate the inefficiency caused by the tax. Clear indicate your results on the diagram.
ECO100 Introduction To Economics Assignment
QUESTION 2:
Brazil experienced its worse drought in history and many states experienced water shortages. The states responded with different policies and, as a result, achieved different outcomes including the impacts on efficiency. The water market was in equilibrium before the drought.
PART I
a. Use the demand and supply diagram to depict the water market before the drought. Describe and correctly label the variables in the diagram.
b. A few states allowed the price of water to increase until the quantity demanded equalled the quantity supplied Explain in detail how the price and quantity of water adjusted to the new equilibrium. Illustrate your answer by referring to the diagram of the water market.
c. Was the out come efficient? Explain by referring to the diagram.
PART II
Draw a new demand and supply diagram to depict the water market before the drought and use it to illustrate your answers to parts (d) – (f).
d. Most states did not allow the price of water to change, despite the impact of the drought on the water market.
Describe the price regulation policy implemented by these states. Use the diagram to illustrate your answer.
e. Examine the impact of this policy on the quantity of water supplied and demanded and the efficiency of the water market. Refer to the diagram in your explanation.
PART III
The two different policy responses received wide coverage in the financial press. Some commentators said the policy chosen did not matter provided the over all outcome was fair. Assess whether or not each of the outcomes was fair. Apply the two notions results and rules of fairness in your assessments.
ECO100 Introduction To Economics Assignment
QUESTION 3:
The Australian government has authorised Pfizer and AstraZeneca to produce and sell COVID-19 vaccines. Each firm must decide whether to charge high price or ‘low price. If both firms charge high price then each would make a profit of $150 million. If both charge ‘low price then each would make a profit of $100 million. If Pfizer charges low price while Astra Zeneca charges high price then Pfizer would earn $200 million and AstraZeneca would earn $60 million. If Pfizer charges ‘high price and AstraZeneca charges low price then Pfizer would earn $60 million and AstraZeneca would earn $200 million.
The information above suggests Pfizer and Astra Zeneca are a duopoly operating in an oligopoly market. Use the information to answer the following questions.
a. Derive the payoff matrix from the information given and write down each firm’s strategies.
b. Determine whether or not a dominant strategy equilibrium exists in this duopoly game In your analysis clearly show how each player chooses their strategy.
c. What is the Nash equilibrium of this game? Explain in detail how you arrived at your answer.
d. One policy analyst said Pfizer and Astra Zeneca are engaged in a Prisoner’s dilemma game. Do you agree or disagree with this analyst? Critically discuss.
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