Assessment 2- Analysing the economic context in which the business operates

Assessment Information

Subject Code	ECO500
Subject Name	ECO500 Economics for Managers
Assessment Number and Title	Assessment 2- Analysing the economic context in which the business operates
Assessment Type	To be completed individually. A written research-based report using analysis of cases involving diagrams and data to substantiate your responses.
Length / Duration	Completion of set tasks using diagrams and written report (2000 words)
Weighting %	30%
Total Marks	100
Submission	On-line submission for the written report
Due Date	Sunday of Week 8, 11:59 pm
Mode	Online submission
Format	Completion of set tasks using Visio or other graphic software plus written report (word.doc)

Description:

The Reserve Bank of Australia (RBA) is committed to doing what it can to support jobs, incomes, and businesses in Australia. The Reserve Bank of Australia reduced the official cash rate a couple of times during the pandemic in 2020-21 to boost the economy. These RBA decisions to reduce interest rates have impacted many sectors including the housing sector in Australia.

Required:

Question:1

Suppose the housing sector in Australia is a perfectly competitive market.

1. Draw a diagram of a perfectly competitive firm making short-run economic losses during covid 19 pandemic situation. Explain your answer. (4 marks)
2. Explain the impact of interest rate reduction in the housing sector. Draw diagrams to show the transition from a short run to a long run in a perfectly competitive market. (7 marks)

Question:2

Now let’s assume XYZ Company is one of the monopolistic competitive firms in Sydney, that specializes in housing construction.

1. Draw a diagram to illustrate XYZ making economic losses in the short run during the pandemic. (4 marks)
2. Assume there is no change in the costs of building materials. Show the impact of interest rate reduction on builder XYZ’s demand from Q2 part (a). (6 marks)

Question:3

Now let us suppose XYZ Co. decides to join the “Fly Buys” scheme which entitles its customers to earn points towards free air travel.

• Discuss how the “Fly Buy” scheme will affect the firm’s cost and revenue curves. Assume XYZ Co was initially in long-run equilibrium and that the scheme is successful. (6 marks)
• If the “Fly Buy” scheme is successful at increasing XYZ’s profit, do you expect these profits to be maintained over the long run? Why or why not? (3 marks)

Note: You must use either Microsoft Visio or any other authentic software for the above-required documentation processes.

Additional instruction: The research must be presented with a Reference List at the end of the paper. You should also check the accuracy of the responses before using them and reference the sources used for this verification.

Marking Rubric for Assessment 2

Identify and explain the fundamental economic concepts (30%)	FL (0-49%)	PS (50-64%)	CR (65 – 74%)	DI (75 – 84%)	HD (>85%)
Please note that descriptions are typically in the middle of the grade range
					Exhibits high
A very good understanding and completing procedures to provide theoretical arguments for their interpretatio ns.	Standard of knowledge in question.	Good understanding. Basic academic standards were reached.	A very good understanding and completing procedures to provide theoretical arguments for their interpretations.	Excellent understanding and completing procedures to provide theoretical arguments for their interpretations.	levels of understanding and completing procedures to provide theoretical arguments for their interpretations.
Describe		Standard of knowledge in question.	A very good understanding and completing procedures to provide theoretical arguments for their interpretations	Exhibits high levels of understanding and completing procedures to provide theoretical arguments for their interpretatio ns.	Exhibits high levels of understanding and completing procedures to provide theoretical arguments for their interpretations.
the effect
of changes
in
economic indicatorson	Good understanding. Basic academic standards were reached.
business
activity.
(30%)

Logically organized and professionally presented the report and formatting andreferencing	Limited knowledge of government economic policy.	Basic concepts and rules to solve government economic policy problems.	Very good concepts and rules to solve government economic policy problems.	Excellent concepts and rules to solve government economic policy problems.	Exhibits a very high level of concepts and rules to solve government economic policy problems.
Prepare a report to your client (15%)	Logically organized and professionally presented the report and formatting and referencing	Attempted to organize report in a logical manner with referencing	Shows organization and coherence in writing a report with referencing	Very professional presentation and formatting with authentic referencing where appropriate.	Disorganized/incoherent.