Reflective Assessment Help on Economics Online Tutoring
Reflective Economics
Question 1.
Why is it not possible for Mike do all the three things at the same time?
It is not possible for Mike to do all the things because if he takes a gap year than it means he won’t be continuing his studies and if he has decided to study than he cannot take a gap year because the fundamental concept of gap year is to take some time from studies. Moreover, with studies Mike can only work part time and not full time because he has his school for a few hours than he is free so he can take up a part time job.
[hbupro_banner id=”6299″]⦁ Define and explain the opportunity cost of Mike’s decision to go to University. 2 Marks
Opportunity cost means to choose the first preference and to give up the cost of the second priority when buying a good or a commodity. In this case Mike has chosen to go to university this means that the opportunity cost was the gap year. During the gap year, Mike could have taken up a full-time job or have plans to travel with the money saved.
⦁ Describe an occasion where the concept of opportunity cost applied to you. 1 Mark
My case was the same as Mike however, I decided to take a gap year before university and took up a full-time employee as a research analyst. My opportunity cost was university studies. During that gap year I earned a good amount that was saved to spend during my university years.
Question 2.
Normative statements are based on value judgments, something that is subjective in nature whereas positive statements are based on opinions, something that is provable and objective (Davis, 1998). For example, a normative statement can be that COVID-19 is the most dangerous virus in the world today where as a positive statement can be that to stop the spread of COVID-19, the countries should implement lockdown in every state.
Question 3.
⦁ Change in quantity demanded”. 1.5 Marks
The change is quantity demanded occurred when Mike purchased three cups of beer rather than two due to a thirty percent discount in the price of the beer. A change in quantity demanded means a movement along the demand curve in the graph because there is change in a particular as the pub substantially decrease the price for an hour. The graph below will show a change in quantity demanded:
⦁ Change in demand”. 1.5 Marks
The change in demand occurred when Mike purachased a new pair of NIKE shoes that were considered to be among the best. A change in demand means a shift in the demand curve because of taste, preferences, price of the substitute or complementary goods or expectation about the increase or decrease in the price. In this scenario the change in demand is due to taste of the buyer and the willingness to buy the pair of shoes regardless of the price. The graph below will show a chang is quantity demand:
Question 4:
The increase in the face masks have increased even when there is an increase in the supply because this commodity doesn’t have any related goods like substitutues or complementary so, the price of the related goods would be constant. The disease has been declared pandemic so the virus has speead not only in China but all over the world. This is the reason why theire is an increase the price even though the supply has increased. These masks are supplied all over world and as the seller are observing the situation, they have increased price and the people are still buying it regardless of the price. The supply graph is shown below to further elaborate the answer:
Question 5.
There are two outcomes of the given situation, when there is an increase in the demand of yoga providers but due to the rigid restriction by the government on the service provides the supply of the services will eventually decrease however the equilibrium market price of the service will increase at the same time the quantity of the equilibrium might be at constant, reduce or rise. The graphs will below will explain the situation:
Question 6.
⦁ Climate change is a global issue. Use demand and supply graph(s) to illustrate and explain how the introduction of an emission-trading scheme can reduce pollution. 2 Marks
Climatic change is now considered a major issue around the world and governments have been trying to reduce it through giving incentives to the firms. One such way to reduce the pollution is through Carbon Tax, the main concept of this tax is to make the buyers and seller pay the entire social cost of generating pollution in the environment. The graph of the increase in tax is given below:
⦁ Name two countries that have introduced a carbon tax and what is their price on carbon? 2 Mark
Among the countries who have implemented carbon tax on their carbon emission companies is Australia, that applied carbon tax in July, 2012. The price of the carbon tax was twenty three dollars per tonne (O’Gorman & Jotzo, 2014).
Another country that applied carbon tax on its carbon emission companies is The United Kingdom that has implemented the tax in 2013. The price of carbon tax is eighteen pounds per tonne (UK Government, 2018).
Question 7.
A maximum price is set by the governments for the lower class to afford the product. This is due to the fact that lower class individuals are already unable to buy few basic foods but if the prices of eggs increase, they wont be able to buy the basic foods like eggs. The graph below is shown to explain the impact of maximum prices on the market of eggs.
Question 8.
⦁ Use demand and supply graph(s) and the price elasticity of demand concept; explain why an arrest of drug dealers that results in a 50 percent reduction in the supply of heroin will increase the total revenue of the remaining Heroin dealers in the market. 2 Marks
The above situation addresses the elasticity of demand with total revenue. The main concept of elasticity of demand is the change in price will cause a huge change in quantity demanded. So, when there are less dealers in the market the supply of the heroine would be low but the prices will rise but the consumers will remain constant and would need the previous supply of heroine so they will buy the product no matter the cost. This will increase the total revenue because the increase in prices will cover the revenue lost on heroine sold previously. But the demand curve would less elastic due too a slight change in the quantity demanded that in other words in inelastic demand. The curve below will further elaborate the situation
⦁ If you owned a business, how will you apply your understanding of price elasticity of demand in your pricing policy? Use a numerical example in your answer 2 Marks
From a pricing point of view, I would apply the reduction in prices of the product or service I am producing. As people, buy those products that are not that expensive and are easy to access. For example, Apple Inc. in 1995 reduced the prices of their computer by 50% and the quantity demanded was through the roof and there was a rapid increase in their sales (Carbaugh, 2013).
A numerical example of a junk food restaurant,
Price Quantity
9 2
8 4
5.5 9
4.50 11
2 16
1 18 If we look into the formula below,
We will calculate the first two values given in the table:
Now we will calculate the last two values in the table:
When we analyse the values through |EDp| that is the absolute value of the calculated values:
|EDp| < 1 = inelastic = 0.25
|EDp| > 1 = elastic = 9
Note: the negative values would be converted to positive through the absolute sign
References:
Carbaugh, R. J. (2013). Contemporary economics: an applications approach. ME Sharpe.
Davis, J. B. (1998). Normative and Positive Economics. In Encyclopedia of Political Economy. Eds. Phillip Anthony O’Hara. London: Taylor & Francis (Routledge), 804-807
O’Gorman, M., & Jotzo, F. (2014). Impact of the carbon price on Australia’s electricity demand, supply and emissions. Crawford School of Public Policy, The Australian National University CCEP Working Paper, (1411).
UK Government, (2018). Carbon Emissions Tax, Policy Paper, reviewed on 3 April 2020 <https://www.gov.uk/government/publications/carbon-emmisions-tax/carbon-emmisions-tax>
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