Principles of Economics: ECON11026 | Good Grade Guarantee!
Principles of Economics: ECON11026 Solved
Referencing Styles : Open | Pages : 13
Question 1: Refer to Chapter 6- Imperfect Competition(a) Explain why the retail clothing industry may be regarded as an example of a monopolisticallycompetitive market. How does this industry differ from one that is perfectly competitive?Assuming identical long-run cost curves, compare graphically (use 2 graphs) the prices andoutputs that would result under the long-run monopolistic competition and perfect competition.(4 marks).(b) Is the outcome in a monopolistically competitive market desirable from the standpoint ofsociety as a whole? (1 mark)(c) Illustrate and explain how successful advertising or promotional campaigns can affect firm’sprofits. (2 marks)Total = 7 marksQuestion 2: Refer to Chapter 7- Market Failure and Government Policy(a) The table below gives the costs and benefits of an imaginary firm operating under perfectcompetition whose activities create a certain amount of pollution (It is assumed that the costsof this pollution to society can be accurately measured).i) What is the profit maximizing level of output for this firm? (1 mark)(ii) What is the socially efficient level of output? (1 mark)(iii) Why might the marginal pollution costs increase in the way illustrated in this example?(1 mark)(b) Many economists have argued that a form of ‘congestion’ tax ought to be imposed onmotorists who use their cars on busy roads, to take account of the external costs they imposeon road users and pedestrians. Comment on the effectiveness and the relative advantagesand disadvantages of the following measures to reduce congestion:(i) Increase the rate of duty on petrol (1 mark)(ii) Setting up tollbooths to charge motorists for using certain stretches of road (1 mark)(iii) Car pooling (1 mark)(iv) Subsidising public transport (1 mark)Total = 7 marksQuestion 3: Refer to Chapter 9- Introduction to Macroeconomics(a) What are the latest figures for the unemployment rate, the growth of GDP and the inflationrate? [To find out, visit the Australian Bureau of Statistics (ABS) website at: www.abs.gov.au/](2 marks)(b) Based on your analysis of the above data, where would you place Australia in the businesscycle? Explain your reasoning. (2 marks)(c) The table below gives the national accounts data for a hypothetical economy in 2014.Question 4: Refer to Chapter 10- The Determination of GDP(a) Refer to the above Table in Q3(c) and calculate the level of Injection (J) and Withdrawal (W)for the hypothetical economy. Based on your calculation of W and J, what can you say aboutthe GDP growth? (1 mark)(b) Illustrate and explain deflationary and inflationary gaps (2 marks)(c) Distinguish between frictional, structural and cyclical unemployment. Which category ofunemployment is mostly affected by the emerging technologies such as cloud services,Artificial Intelligence and robots? Explain. (2 marks)(d) Using a graph, explain how the minimum wage legislation may result in unemployment.(2marks)
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