Instructions
A cover page will go at the front of your assignment submission. It must contain the following information at a minimum: Name (in full), USQ student number.
The answer to each question shall have a maximum length of one (1) A4 page, font size 12.
Content which goes over the one page limit per question will not be marked.
Maximum length of your submission shall therefore be eight (8) pages.
References (if needed and up to a maximum of three) should be placed at the end of your answer to each question.
Each question shall be marked out of five (5).
Marking criteria (you will be judged on the following)
– Accurate calculation of the mathematical problem and a valid interpretation of the result.
Question 1
Suppose a manufacturing firm acquired a production technology that can be characterized by a learning curve. Every time the firm increase production by one unit, their costs decrease by 10%. The first unit costs them $284 to produce. Prepare a manufacturing cost table up to 15 units and calculate the total cost, marginal cost and average cost. If they receive a proposal to produce and sell 10 units, what is the break-even price? Now, what is the new break-even price for 12 units?
Question 2
Assume that the ‘marker pen’ market is competitive and includes no transaction costs. Twelve suppliers are willing to sell each pen at the following prices: $30, $29, $27, $26, $25, $23, $22, $20, $16, $15, $13 and $12. Twelve buyers are willing to buy one pen at the following prices: 6$, $8, $10, $12, $16, $18, $19, $20, $23, $26, $28 and $29. Draw the market equilibrium graph. What are the equilibrium price and quantity? If the price is $29, explain whether the market has excess demand or supply? [Hint: apply the law of demand and supply.]
Question 3
On Valentine’s Day, the price of roses increases by more than the price of chocolates and greeting cards. Why? [Hint: Consider what makes roses, chocolates and cards different and how that difference might affect supply’s responsiveness to price.]
Question 4
Discuss the basic differences between a competitive and a monopoly market. Which market has higher elastic demand in the long run and why?
Question 5
Explain the three basic strategies that the mining industry of Australia should implement to stay one step ahead of the forces of competition, internationally.
Question 6
Explain the effects of the AUD appreciation on:
(1) Exports of Australian goods, the price level of imported goods in Australia and tourism to Australia;
(2) Revenues of Australian financial institutions with South-east Asian trading subsidiaries in Japan (which earn profit in Yen).
Question 7
“People perceive how attractive the price of a consumer good is based on its distance from a reference price”- do you agree with the statement? Explain why or why not.
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