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Individual Assignment Instructions

Due Date: 25-October-2020

Length: 2000 words

Submission method: Turnitin (online)

Answer all five (5) questions. Maximum of 400 words for each question. Use diagrams where

appropriate to enhance and explain your response. Provide supporting evidence and references

where applicable to justify your arguments. Your response should always be firstly identifying

what part of theory the question relates to and explaining that theory, how the theory helps to

answer the question and then presenting the solution to the question posed.

Question 1. The Covid-19 pandemic in early March has resulted in shortages of toilet paper, rice,

flour, pasta and many other household items, and it took some time before supermarket shelves

returned to normal. Explain why there were shortages of these products using demand and supply.

You can pick one particular item or more to explain your answer.

Question 2. Suppose you are in charge of sales at a pharmaceutical company, and your firm has a

new drug that causes bald men to grow hair. Assume that the company wants to earn as much

revenue as possible from this drug. If the elasticity of demand for your company’s product at the

current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the

price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Question 3. Automobile manufacturing is an industry subject to significant economies of

scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos

is no more than 2.5 times the quantity produced at the bottom of the long-run average cost

curve. What do you expect will happen to the domestic auto industry in the long run?

Question 4. For a high-income economy like Australia, what aggregate production function

elements are most important in bringing about growth in GDP per capita? What about a middle-

income country such as India? A low-income country such as Afghanistan?

Question 5. Imagine that the government statisticians who calculate the inflation rate have

been updating the basic basket of goods once every 10 years, but now they decide to update it

every five years. How will this change affect the amount of substitution bias and quality/new

goods bias?

Presentation

The following points are a general guide for presenting assessment items.

• Responses to assessment items should be typed. Use 1.5 spacing.
• Use a wide left margin. Markers need space to be able to include their comments. Use

a standard 12pt font such as Times New Roman, Calibri or Arial.
• Left- justify body text.
• Include a separate title page with your name, student number, subject code, assessment

question. Number your pages (except the cover page).
• Use a header or footer with your name and student number on each page.

• Always keep a copy of your assessments. Both a hard copy and an

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