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
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