2015 S1 Assignment
BEO2264: Microeconomic Analysis Semester 1, 2015
ASSIGNMENT
_________________________________________________________
Due Date: The week beginning the 11th of May, 2015. The completed assignment must be submitted to your lecturer during your scheduled seminar.
Value: 20% of Total Assessment
You should attach a cover sheet, and do not submit the assignment in folders or plastic protective covers.
The assignment to be done in groups of two.
Late submission will incur a penalty of 10 per cent per day.
Question 1 (5 marks, 200 words)
(a) Thomas Malthus reasoned that because the amount of land is fixed, as population grows and more and more labour is applied to land, the productivity of labour in food production would decline, leading to widespread famine. Malthus’s prediction failed to materialise as advances in technology greatly increased labour productivity in food production. Do such technological advances contradict the law of diminishing marginal returns?
(b) Why do you think the motorcar production exhibits strong economies of scale but not the trucking (haulage) industry?
Question 2 (5 marks, 200 words)
Since the peak in 1976, per capita beef consumption in the United States has fallen by almost 30 per cent. Assuming that beef producers operate in a perfectly competitive market:
(a) Using firm and industry diagrams, explain the short run effect of declining demand for beef.
(b) Using firm and industry diagrams, explain the long run effect of declining demand for beef.
Question 3 (5 marks, 200 words)
Many boats are made of fiberglass, which is derived from petroleum. Suppose the price of oil rises (assume that boat producers operate in a perfectly competitive market):
(a) Using diagrams, explain what happens to the marginal cost, average variable cost and average costs curves.
(b) What happens to the profits of boat builders in the long run?
ASSIGNMENT
_________________________________________________________
Due Date: The week beginning the 11th of May, 2015. The completed assignment must be submitted to your lecturer during your scheduled seminar.
Value: 20% of Total Assessment
You should attach a cover sheet, and do not submit the assignment in folders or plastic protective covers.
The assignment to be done in groups of two.
Late submission will incur a penalty of 10 per cent per day.
Question 1 (5 marks, 200 words)
(a) Thomas Malthus reasoned that because the amount of land is fixed, as population grows and more and more labour is applied to land, the productivity of labour in food production would decline, leading to widespread famine. Malthus’s prediction failed to materialise as advances in technology greatly increased labour productivity in food production. Do such technological advances contradict the law of diminishing marginal returns?
(b) Why do you think the motorcar production exhibits strong economies of scale but not the trucking (haulage) industry?
Question 2 (5 marks, 200 words)
Since the peak in 1976, per capita beef consumption in the United States has fallen by almost 30 per cent. Assuming that beef producers operate in a perfectly competitive market:
(a) Using firm and industry diagrams, explain the short run effect of declining demand for beef.
(b) Using firm and industry diagrams, explain the long run effect of declining demand for beef.
Question 3 (5 marks, 200 words)
Many boats are made of fiberglass, which is derived from petroleum. Suppose the price of oil rises (assume that boat producers operate in a perfectly competitive market):
(a) Using diagrams, explain what happens to the marginal cost, average variable cost and average costs curves.
(b) What happens to the profits of boat builders in the long run?