ECON1020 - Semester 2 2020
Prices and Markets
Assessment Guidelines
Professor Robert Hoffmann

Assessment Task 1
This is a multiple choice quiz worth 10 marks. It is based on all the material from weeks 1-3
(lectures and tutorials). You must access and complete it on Canvas. The quiz will consist of 10
questions and you have 60 minutes to complete it. All questions are equally weighted. There is no
negative marking (where a wrong answer loses you marks). You will get one attempt at this quiz.
You will not be able to to go back to a previous question once you submitted your answer to it. The
quiz needs to be competed between 10 and 14 August 2020. The weekly tutorial quizzes provide
some guidance as to what the assessment task 1 will look like in terms of format and type of
questions.
Sample Quiz
1. Based on the table below, using the midpoint formula, what is the income elasticity of
demand for good X?

-3.5
-0.29
0.29
3.5
2. Which of the following statements is not correct, based on the figure below?

When the price is $10, quantity supplied equals quantity demanded.
When the price is $6, there is a surplus of 8 units
When the price is $12, there is a surplus of 4 units.
When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

3. Which of the following phrases best captures the notion of efficiency?
Minimum Waste
Absolute Fairness
Equal Distribution
Equitable Outcome
Income Q of X Purchased
$30,000 2
$40,000 6
4. Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity cost of
producing baseball bats is lower than Tom’s opportunity cost of producing baseball bats,
then
Tom must have an absolute advantage in the production of baseball bats.
Jim must have an absolute advantage in the production of baseball bats.
Tom has a comparative advantage in the production of baseball bats.
Jim has a comparative advantage in the production of baseball bats.
5. The cross-price elasticity of demand between Kit Kat and Mars is negative. Based on this
information alone, we can conclude the two products are substitutes
True
False
6. Economics is primarily the study of
the state, nation, government, and politics and policies of governments
the problems related to the existence and evolution of society
how agents choose to allocate scarce resources and how these choices affect society
the mental functions and behaviour of individuals and groups
7. Which of the following statements correctly highlights the difference between
microeconomics and macroeconomics?
Microeconomics deals with a small part of the economy, whereas macroeconomics deals with
aggregate economic performance.
Microeconomics describes what economic agents actually do, whereas macroeconomics
describes what economic agents ought to do.
Microeconomics primarily deals with positive analysis, whereas macroeconomics primarily deals
with normative analysis.
Microeconomics is descriptive, whereas macroeconomics is advisory.
8. Which of the following best describes equilibrium?
A stable situation where no economic agent would benefit by changing his or her behaviour
A situation where economic agents do not optimise as they do not have perfect information
A situation where only one individual or firm makes an optimal decision
A situation where the government intervenes to allocate resources
9. Empiricism is analysis that uses ________ to test theories.
illustrations
philosophy
data
value judgments
10. Which of the following is an example of a positive economic statement?
An increase in income causes an increase in savings.
Eliminating poverty is more important than reducing inflation.
Economics is the most useful social science.
The government should ideally work as a welfare state.
Assessment Task 2 (40 marks)
Using the models and theories of either (1) the market or (2) market failure, perform a microeconomic
analysis of one appropriate economic issue or phenomenon of your choice. Clearly explain your chosen
question, method and conclusions.
Assessment Task 3 (50 marks)
Using the models and theories of either (1) market structure, conduct and performance, (2) game theory or
(3) the boundary of the firm, perform a microeconomic analysis of one appropriate economic issue or
phenomenon of your choice. Clearly explain your chosen question, method and conclusions. Comment on
the link between market structure and performance for your chosen issue.
Assessments tasks 2 and 3 share the same format. Each has limit of 1500 words to be submitted on Canvas
by 25 September (assessment task 2) and 23 October 2020 (assessment task 3) respectively. Your
submissions should be word processed and contain word count and bibliography. Every percentage point of
word count over the limit (not counting bibliography) will result in a percentage point reduction in the
assignment mark until it reaches zero. Your submission will receive an automatic Turnitin similarity score that
should not exceed 25%. You should check this score using the tool Canvas before submitting. Exceeding
this limit raises the risk of your submission being subject to an academic integrity process. As per University
regulations late assignments receive a 10% penalty per day until the mark reaches zero. Marks will be given
according to the rubrics on Canvas.
In both assessments, your task is to conduct economic analysis of an issue that you select yourself, just as
businesspeople and policymakers do. You will be assessed on what you learnt in the course by correctly
choosing and applying definitions, methods and theories from lectures and tutorials. As this is a
microeconomics assignment you should not write a general or journalistic report or use concepts from other
courses not discussed in this course.
• Look at the business and economics news for ideas for an appropriate issue. It needs to fit the purpose
of microeconomics (lecture 1) - a topical, important example of resource allocation with questions you
can answer by applying microeconomic methods. State the question, why it’s interesting and
economically significant. Present facts or data to illustrate.
• Select the right method (i.e. microeconomic model, theory or tool from this course) to answer your
question. Explain your method. Assume your reader needs to be explained every concept needed to
follow your analysis.
• Apply the method to your issue. Report the steps of your analysis and your findings. Typical analysis
discusses the economic agents, how they exchange, the equilibrium and factors that change it and
finally welfare implications. Use diagrams or models as they answer the question better than only words.
• Your conclusion will directly answer the question and maybe look at the big picture - the significance and
limitations of your work.
Clearly structure your report (depending on topic), for instance using numbered sections for each of the parts
of the task, e.g. introduction, model, analysis and conclusion. Introduction and conclusion will normally be
shorter. Sample topics, questions relating to them and appropriate methods/analytical tools are given in the
table below. They are taken from lectures and the tutorial questions you tackled in class. Please do not use
these or indeed any examples from classes as choosing an original topic and analytic tool by yourself is part
of the assessment. These and other cases discussed in lectures and tutorials give you an idea of how to
complete this assignment.
We strongly advise you to send your tutor a short email with a short summary your chosen topic and
questions (please do not send full drafts) for approval at least two weeks before the deadline. You may
append a copy this approval email to your submission. It will be your responsibility to ensure you completed
your assessment in good time. Managing this project and your time will be critical for your success.You
should complete the RMIT micro-credential ‘Managing Time and Priorities’ to help you do this. Note this is
will not be part of your grade for this course.
Topic Question Potential Methods
Lecture 3.2.3.
Coffee Prices
What explains the rise in world coffee prices in 2011? Comparative statics
Tutorial 3
1d. Mad Cow
Disease
During the 1993 'mad cow disease" or BSE outbreak in the UK, evidence
emerges regarding the dangers of eating beef from infected animals.
Which markets are affected, and what are the effects?
Comparative statics,
elasticity, market
intervention
Tutorial 3
2.3. Building Ban
Should Bangalore introduce a ban on building new apartments to
safeguard sustainable urban development? What is the effect on
apartment prices when there is a rise in the city’s population?
Comparative statics,
elasticity, market
intervention
Tutorial 4
1. Rent Controls
Analyse rent controls in the Melbourne residential rentals market using an
appropriate diagram. Who benefits and who loses out? What is the effect
on total surplus? How is the policy affected by demand and supply
elasticity?
Comparative statics,
elasticity, market
intervention
Tutorial 4
3. Alcohol Excise
Duty
Australia has a reputation as a hard-drinking culture yet there has been a
steady decline in alcohol consumption over the past three decades.
Government is considering reductions to its relatively high taxes on
alcoholic drinks. Which markets are affected, and what are the effects? Is
this policy appropriate?
Comparative statics,
elasticity, market
intervention, market
failure
Tutorial 5.1.
Hosting F1
Should Victorian taxpayers should pay $60 million annually to host the F1
Australian Grand Prix? Examine the pros and cons.
Comparative statics,
market failure
Tutorial 9 Should governments be worried about Google’s 92% market share for
internet search engines? What interventions, if any, should they adopt?
SCP-paradigm,
monopoly
Lecture 10.1.4.
Mobile OS
market share
What is the effect of the changing shares of mobile phone operating
systems on market performance?
SCP-paradigm, game
theory
Lecture 10.2.1.
coordination
Why is coordinating on the same social media app or technological
standard difficult for users? What can be done to make their coordination
easier?
Game theory
Lecture 10.3.1.
Supermarket
duopoly
What is the effect of two large supermarket chains sharing most of the
Australian grocery market on prices? What factors influence the effect of
these firms’ interaction on welfare?
Game theory
11.3.1.
Starbucks’
optimal boundary
What is the vertical chain for Starbucks Coffee? Has the firm reached its
optimal degree of vertical and horizontal integration? What further scope
for (de)integration or diversification exists?
Transaction cost,
vertical and horizontal
integration

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