1 ECON203 MICROECONOMIC ANALYSIS

1 ECON203 MICROECONOMIC ANALYSIS S3, 2015 Compulsory Assignment (10%) Due 9am Monday 18 January 2016 Instructions: ? Answer ALL questions clearly and in your own words. Where diagrams are used to illustrate your answer, they MUST be your own diagrams. ? Graphing tools in word or excel may be used (unless indicated). Hand-drawn graphs are also acceptable. ? Diagrams downloaded from the internet or copied from a textbook are NOT acceptable. ? Where explanations in words are used, they MUST be computer typed (with a font size of 12). ? The assignment comprises 4 questions. Altogether the assignment is worth 50 marks and accounts for 10% of the total mark for the unit. The marks awarded will depend on the quality of the reasoning exhibited and the ability to express the argument in a concise manner. ? Each assignment must represent the student's own work. ? In particular, this means that the written answers submitted by the student must be composed by that student. ? Copying of another student's answer or from textbooks, or getting someone else (with or without payment) to do the assignment for you, or part thereof, is clearly regarded as plagiarism. ? Cases of plagiarism will be dealt with severely. ? For further information on plagiarism and how to avoid it, please refer to the university policy about academic honesty and integrity. Submission: In the lecture class on Monday 18 January OR email to me at ha.vu@mq.edu.au before 9am Monday 18 January. No extensions will be granted. Students who have not submitted the assignment by the deadline will be awarded a mark of ZERO, except for cases in which an application for Disruption to Studies is made and approved. 2 Question 1 (10 marks) Read the article “Croissantonomics” and use the demand and supply model with graphs to demonstrate the changes in the market for croissants at different times of the year. Briefly explain. Question 2 (10 marks) Read the article “MH370 deep in minds of Australians, Malaysia Airlines CEO Christoph Mueller says” and discuss the consumer choice of airlines. Are Malaysian Airlines tickets normal (or luxury), or inferior goods? Use a graph to show the substitution and income effects of a decrease in the price of Malaysian Airlines ticket. Question 3 (10 marks) Read the article “Privatization of state-owned electricity assets” and answer the following questions: (i) Draw a graph representing the profit of electricity companies before privatization. Briefly explain. (ii) Draw a graph representing the profit of electricity companies after privatization which leads to increased competition. Briefly explain. Question 4 (20 marks) Read the article “What's Behind the Bottle Price” and answer the following questions: (i) How much substitutability do you suppose exists between inputs in winemaking? How might this factor affect efforts to cut costs? (ii) If a firm was to find a new technology that cut the required ageing time in half, how would it affect the demand for other inputs?