Subject Code & Title :- ECON1001 Economics for Decision Making
Assessment Type :- Assignment
Weighting :- 30%
Question 1: Are some Olympic games more expensive?
Adult ticket prices for games at the 2021 Tokyo Olympics were as follows.
Unfortunately, due to COVID, sales did not materialise.
ECON1001 Economics for Decision Making Assignment
The table below presents a sample of ticket prices for different games that were played as part of a sport at the Olympics in Japan in 2021. At the time of setting these prices, the organisers did not know which team would win the pool matches n or did they know which teams would make it to the finals. The four venues are in various cities in Japan, and the seating capacity varies from 38 000 (at Venue 2) to 82 000 (at Venue 1). There are four categories of adult tickets; in descending order from most expensive to cheapest, they are category A, category B, category C and category D.
1 Match played at Venue 1, capacity 82 000
2 Match played at Venue 2, capacity 38 000
3 Match played at Venue 3, capacity 74 000
4 Match played at Venue 4, capacity 54 000
Question 1.1. Would you expect price elasticity of demand for tickets to be different for each game?
Question 1.2. Why is there such a difference in price between say the Japan versus Fiji game (JPY315 for a category A ticket), the Wales versus Fiji game (JPY175 for a category A ticket) and the final game (JPY715 for a category A ticket)? Why have the organisers not retained identical conditions for each game and instead adjusted the prices? Explain your answer.
ECON1001 Economics for Decision Making Assignment
Question 2:
Assume that you have taken 12 months’ leave without pay from your full-time job as a dressmaker and set up a business ironing and repairing clothes. You have taken out a 12-month lease on a small shopfront in a suburban shopping centre. You have bought all the equipment you need for your business and arranged the fit-out of your premises to accommodate your work requirements. You have paid for these set-up costs out of your previous savings. You will not be able to buy any more equipment during the next 12 months. For the year your total explicit costs are $25 500, and your implicit costs are $45 000.
Question 2.1. Give some examples of your explicit and implicit costs.
Question 2.2. Distinguish between your short-run and long-run period.
ECON1001 Economics for Decision Making Assignment
Question 2.3. In your short-run period, how would the law of diminishing returns be likely to apply in your case if the business was doing well?
Question 2.4. If your total revenue is $80 000, what is your economic profit?
Question 2.5. If you were breaking even, would you stay in business or go back to your old job?
Question 3.
Assume that you have set up a small business in a perfectly competitive industry.
Your short-run period is six months, based on the amount of time for which you are locked into a lease agreement for the premises. Consider your financial situation:
Total revenue: $1000 per week
Fixed costs: $800 per week
Variable costs: $700 per week.
ECON1001 Economics for Decision Making Assignment
Considering these figures, answer the questions below.
Question 3.1. Will you keep operating the business in the short run? Explain your answer illustrating it with a diagram.
Question 3.2. What will you do in the long run? Explain your answer illustrating it with a diagram.
Question 4: Australia Post: Is this monopoly a good idea?
ECON1001 Economics for Decision Making Assignment
Question 4.1. What kind of barriers to entry have allowed Australia Post to continue as a monopoly in providing postal services for standard mail in Australia? Explain your answer.
Question 4.2. What are the arguments against and for such a monopoly? Illustrate your answer with a diagram.
Question 4.3. Australia Post maintains a monopoly in the standard-mail market in Australia in that it controls both the infrastructure and the retail side of the industry. How could it be losing money?
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