H17EC_April_2022-2023_HWOL_TZ1-TZ2_TOC_24hrs

EDINBURGH BUSINESS SCHOOL

Master of Business Administration

H17EC

ECONOMICS

TIMED ONLINE COURSEWORK

April Examination and Assessment Diet 2022-2023

Duration: 24 Hours

This timed online coursework consists of one case study worth 20 marks
and two essays each worth 40 marks.

There is no choice in the selection of questions to be answered.

Maximum word limits are provided for all questions.

Heriot-Watt University H17EC_April_2022-2023_HWOL_TZ1-TZ2_TOC_24hrs

SECTION I

Case Study Maximum Word Limit 500 words

A new university has been built outside a small town in Scotland, which has resulted in a
mass influx of workers and their families to the area. As a result of this, the town has been
suffering from a shortage of available rental housing. In response the local government has
pledged to build many new houses for rent in a new estate at the edge of town, which will be
complete in three years’ time. The local government expects to make a large profit once the
houses are complete.

What would you expect to happen in the market for rental housing in the town over the next
three years? Do you agree that a large profit will be made?
(Total 20 marks)

Page 2 of 4
Heriot-Watt University H17EC_April_2022-2023_HWOL_TZ1-TZ2_TOC_24hrs

SECTION II

Essay 1 Maximum Word Limit 2000 words

Paul Samuelson defined a public good as follows:

“Goods which all enjoy in common in the sense that each individual's consumption of such a
good leads to no subtractions from any other individual's consumption of that good.”

Why does the market fail to provide enough public goods and what can be done about this?
Provide your own examples to illustrate your answer.

Discuss other areas where the market economy may be seen as inefficient.
(Total 40 marks)

Page 3 of 4
Heriot-Watt University H17EC_April_2022-2023_HWOL_TZ1-TZ2_TOC_24hrs

Essay 2 Maximum Word Limit 2000 words

During periods of strong economic growth, a country can still experience high rates of
unemployment.

a) Explain the difference between potential output and actual output.

(10 marks)

b) How might fiscal and monetary policy be used to resolve the unemployment
problem?
(10 marks)

c) Under what circumstances would the employment gap be reduced without action on
the part of the government or central bank?
(10 marks)

d) Under what circumstances might the government be willing to see a rise in the
unemployment rate?
(10 marks)

(Total 40 marks)

END OF PAPER

Page 4 of 4