Deakin College MAE101

Economic Principles Trimester 3 2020

Individual Written Assignment

Assignment Weighting 30%
Word Limit – 1000-1200 words (excluding graphs, tables, footnotes and reference list)
Due date: (Week 9) Friday 8 January at 11:59pm
An electronic copy of your assignment is to be submitted into Turnitin on Moodle on or
before the due date and time. Late submissions will attract a deduction of 5% (1.5 mark) for
each day they are late. Assignments submitted more than 5 days after the submission date
will not be marked and will receive a “0” score. N.B. Extensions will generally not be granted
unless there are exceptional circumstances and can only be granted by the Unit
Coordinator.
Assignment writing guide:
You do not need to include an Assignment Cover Sheet as part of your submission.
Please do not re-write the question in full, just write the question numbers and parts e.g.
Q1. (i). and then your answer.
Do not copy directly from any other student’s work and do not copy directly from online
sources or textbook sources even if you cite their work. You must write your assignment in
your own words. You can however refer to another author’s work as a guide or for ideas,
and paraphrase in your own words, but you must correctly cite their work. Please use the
Harvard style of referencing and ensure that all ideas, quotes and paraphrases of another
authors work has been referenced correctly, both in-text and alphabetically by authors
surname in a reference list at the end of your assignment. A copy of Guide to Assignment
Writing and Referencing is available on the Deakin University website:
http://www.deakin.edu.au/students/study-support/referencing/harvard and further
assistance is available through student learning advisors or library staff.
N.B. Students found to have a high level of similarity to another student’s work and/or
another author’s work and/or have insufficient referencing will be called in for an
academic misconduct interview where penalties may apply.
Please submit your assignment as a PDF as it will ensure your diagrams, tables etc. are more
secure and won’t move around as they can in MSWord and other formats.
Graphs should be clearly presented with relevant axis labels and a title given to each graph
and be drawn digitally i.e. Using the drawing tool in Word, and not scanned in. For a
demonstration of how to do this, please see the following video by ExtD Tech (2015). See
link: https://www.youtube.com/watch?v=W5OmRo8mKzM
Your assignment should include footnote identification (name and student ID) on the
bottom left hand side, and page numbers, on the bottom right hand side of the page.
Use size 12 font for your assignment and use bold font for the question numbers/parts.
Include at least four (4) authored and scholarly/reliable references for your assignment.
E.g. Do not use “Wikipedia” as it is not a reliable source as anyone can contribute to or
change its information.
Up to three (3) marks will be deducted for insufficient referencing, incorrect in-text citation
and for not following the assignment instructions.

Turnitin Submission Checklist

Have you adhered to the specified word-limit (1000-1200 words)?

Your name and ID are footnoted on the bottom LHS of each page, with page
numbers on the RHS
Your font size is 12 point
All graphs are drawn digitally using the Word drawing tool
Have you referenced at least 4 authored, reliable sources in your assignment
and made sure that all ideas, quotes and paraphrases of other authors work has
been referenced correctly, both in-text and in a reference list?
Your file is saved as a PDF document with your student ID and unit code as the
file name (e.g. SMITH1902 MAE101 Assignment)

The assignment will draw on your understanding of some of the key concepts and models
we have studied in Gans et al., Principles of Economics, (2018). Ensure your responses to the
assignment questions use the economic terminology and analysis we have developed in the
course.
Question 1:  

Recently the local government in Shanghai has introduced a price ceiling for the sale of apartments
to deal with the huge increase in prices over the last few years. Apartments that could sell in the
market for 130,000 yuan (US$19,400) per square metre, now have to be sold at a price about 30 per
cent lower, that is, at a price of 100,000 yuan per square metre to meet the government
requirement. Source: Zhen, Summer (2017) – see link:
https://www.scmp.com/business/article/2105987/shanghais-price-controls-new-homes-toughest-
china-says-jinmao-chief.

What effect is this likely to have on the market for apartments in Shanghai? What will happen to the
quantity of apartments demanded? What will happen to the quantity supplied? Who gains? Who
loses? Draw a diagram to support your answer. (5 marks)

Question 2:

In the 1980s Australia introduced restrictions on the amount of foreign clothing products that could
be imported and sold in Australia. Source: Emmery, Michael (1999). See link:
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pu
bs/rp/rp9900/2000RP07

Using supply and demand analysis, graph and explain what the effect of these restrictions would
have been on the market for foreign clothing in Australia and on the market for locally made
clothing in Australia. (Please note: You do not need to discuss tariffs or quotas when answering this
question). (5 marks)

Question 3:

In 2018 steel workers in America received the biggest wage increase in six years after long
negotiations with the steel companies. Source: Singh, Rajesh Kumar (2018). See link:

https://www.reuters.com/article/us-u-s-steel-union-contract-exclusive/exclusive-u-s-steel-workers-
set-to-get-biggest-pay-raise-in-years-sources-idUSKCN1MQ2Q3

At the same time the price of aluminium, which is a substitute for steel, has seen a price drop in
2018 selling at below US$2000 a tonne. This is mainly due to increased supply of aluminium from
China. Source: Djukanovic, Goran (2018). See link:

https://aluminiuminsider.com/aluminium-year-in-review-and-what-to-expect-in-2019/

What are the effects on the equilibrium price and quantity of steel if the wages of steelworkers rise
and, simultaneously, the price of aluminium falls? Draw a diagram to support your answer. (5 marks)
Question 4:

In 2019 drought has reduced the amount of production of farm products in Australia by many
billions of dollars. Source: Sullivan, Kath (2019). See link: https://www.abc.net.au/news/rural/2019-
03-05/value-of-australian-farm-production-drops-abares-figures/10867294.

At the same time the demand for farm products is generally considered to be price inelastic.
Economics Online (2019). See link:
https://www.economicsonline.co.uk/Competitive_markets/Primary_markets.html

If the demand for farm products is price-inelastic, a reduction in farm production will increase farm
incomes. Explain why this is so. Use a diagram to support your answer. (5 marks)

Question 5:

In 2019 the UK government increased the tax paid on flights out of the UK (specifically Heathrow
airport) to approximately $300 per ticket. This tax is collected from airline companies who use
Heathrow Airport for their operations. Source: Graham, Matt (2018). See link:
https://www.australianfrequentflyer.com.au/australian-departure-tax/

Consider the market for airline travel. The initial market equilibrium is at 10 million tickets sold per
year at an average price of $500 each. Then, the UK government imposes a tax on the market,
collected from sellers (the airline companies). The tax is $300 per ticket.

Show the effect of this on the market for airline travel. Show the effect on consumers of airline
travel, on the airlines and on the government. Does the UK economy gain or lose as a result of the
tax? Explain why. Use a diagram to support your answer. (5 marks)
Reference list:

Djukanovic, Goran (2018), “Aluminium: Year in Review and What to Expect in 2019”, Aluminium
Insider, Published on 17 December 2018, https://aluminiuminsider.com/aluminium-year-in-review-
and-what-to-expect-in-2019/, Accessed on 20 November 2020

Economics Online (2019), “Commodity and primary markets”, Economics Online,

https://www.economicsonline.co.uk/Competitive_markets/Primary_markets.html, Accessed on 20
November 2020

Emmery, Michael (1999), “Australian Manufacturing: A Brief History of Industry Policy and Trade
Liberalisation”, Parliament of Australia, Economics, Commerce and Industrial Relations Group,
Research Paper 7 1999-2000, Published 19 October 1999,
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pu
bs/rp/rp9900/2000RP07 , Accessed on 20 November 2020

ExtD Tech (2015), “Economics class - How to Make Graphs in Microsoft Word”, YouTube,
https://www.youtube.com/watch?v=W5OmRo8mKzM, Accessed on 20 November 2020

Graham, Matt (2018), “The Australian Departure Tax”, The Australian Frequent Flyer, Published on
14 June 2018, https://www.australianfrequentflyer.com.au/australian-departure-tax/, Accessed on
20 November 2020

Singh, Rajesh Kumar (2018), “Exclusive: U.S. Steel workers set to get biggest pay raise in years –
sources”, Reuters, Published on 17 October 2018, https://www.reuters.com/article/us-u-s-steel-
union-contract-exclusive/exclusive-u-s-steel-workers-set-to-get-biggest-pay-raise-in-years-sources-
idUSKCN1MQ2Q3, Accessed on 20 November 2020

Sullivan, Kath (2019), “Drought wipes billions from Australian farm production”, ABC (Australian
Broadcasting Corporation), Published 5 March 2019, https://www.abc.net.au/news/rural/2019-03-
05/value-of-australian-farm-production-drops-abares-figures/10867294, Accessed on 20 November
2020

Zhen, Summer (2017), “Shanghai’s price controls on new homes the toughest in China, says Jinmao
chief”, South China Morning Post, Published 8 August 2017,
https://www.scmp.com/business/article/2105987/shanghais-price-controls-new-homes-toughest-
china-says-jinmao-chief, Accessed on 20 November 2020