Central Economic Issues

BUSS5001 S2 2019
Term Paper Assignment
In this term paper assignment you are a consultant hired to brief a Minister.
Please address your briefing to the Minister and use concise clear language, referring to the
central economic issues where appropriate. You do not require an introduction or executive
summary more than a sentence or two before addressing each question. You should use
relevant concepts covered in this course, supporting any factual statements with evidence from
relevant, quality sources. These sources do not need to be in the primary literature. If you have
insufficient information to answer the question, state briefly what additional information you
would require to come to an answer. Do not use graphs or images. Do not follow the formal
format of a briefing note (e.g., don’t use ‘background’, ‘issue’, etc sections.) The central goal is
to apply your economics knowledge to answer real-world questions.
Each question is worth 20%. The following criteria relate to the entire assignment:
15% Clarity of expression (including grammar and spelling), presentation (including, but not
limited to, formatting, references, communication (including appropriate vocabulary)
and structure (including use of paragraphs and headings.)
5% Synthesis and use of relevant research if appropriate. You do not need a long list of
citations or references to the academic literature to receive 5/5—relevancy of the citation in
supporting your economic argument is what is marked.
Submission instructions
Assignments submitted should conform to all Business School policies detailed here:
http://sydney.edu.au/business/currentstudents/policy
The assignment is due on 18 October 2019 at 5pm and should be submitted through the
assignment dropbox on the course Canvas site. Your work will be submitted to the similarity
detecting software Turnitin for analysis. An assignment submitted at 5:01pm is automatically
marked as late by the software, so do not wait until the last minute to submit the assignment.
The closing date for the assignment is 28 October at 5pm. Extensions are only available through
the formal Special Consideration System. No simple extensions will be granted.
https://sydney.edu.au/students/special-consideration-and-arrangements.html
Format:
The filename should take the form ########BUSS5001S22019, where ######## is your SID.
DO NOT INCLUDE YOUR NAME IN THE FILENAME OR IN THE SUBMITTED DOCUMENT.
Your assignment must be double spaced, in size 12 font, and saved in .DOC or .PDF format (if
PDF format is chosen, the text must be machine-readable). The header of the document should
include your SID on the right-hand side, on every page. The page number should be in the

footer on the right-hand side. Do not include a coversheet.
Please use APA 6th Edition Referencing Style. Small differences in the reference list from the
formal APA style are fine as long as it’s easy for us to find the reference and they are consistent
with the referencing style.
This paper has a limit of 750 words. This is roughly enough for 4 concise paragraphs. You must
do a word count. References, title, and your SID do not count to the word count.
Late penalties:
Any assessment submitted after the due date will incur a late penalty of 10% of the total marks
per day late. Since submission is electronic, weekends and public holidays count as days in the
same way as working days.
Any assessment submitted after the due date will incur a late penalty unless excused by special
consideration, special arrangement or disability services adjustment.

Assignment Questions
Dear Consultant,
The Minister for Mines in Western Australia, the Honourable Bill Johnston, has requested a
concise briefing due to this government’s concern with the financial status of the lithium
industry, and the pollution the industry creates.
The Minister has seen the recent news coverage listed here:
• Crunch time for lithium sector, The Australian (available in eReserve on Canvas)
• https://www.mining.com/lithium-prices-to-remain-low-as-hype-has-met-reality-cru/
• https://smallcaps.com.au/lithium-production-wont-keep-up-longer-term-demand/
We request you advise the Minister on the following questions. For each answer, concisely
summarize your main recommendation and the economic principle(s) supporting your
recommendation. Please use simple research with appropriate citations when necessary, so
that the Minister may read more if required. As this is a Ministerial Briefing, if you find that
additional information is required for a precise answer please state what this is, and we will
pursue this internally within the Ministry. Please provide each answer under a separate
numbered point.
Sincerely,
Alastair Fraser, Assistant to the Minister

1. The recent entering of voluntary administration by Alita and has alarmed the Minister. It
appears that many WA lithium mining companies are currently losing money due to low
prices. The minister notes he has heard that the other countries’ governments have,
when facing low prices for their resources, restricted output to improve the profitability
of the industry. The Minister requests your advice: do you advise the WA government to
intervene in the lithium market, restricting supply from WA mines in order to improve
profitability for the lithium mines?
2. The next WA State election will occur in March 2021, and this requires preparing a
budget projection for the State covering the following 5 years after the election. Being
able to forecast large revenues over the post-election period will allow the government
to claim it has balanced the budget. When resource companies earn large economic
profits, taxes on this profit creates very substantial revenue for the WA government.
When the industry earns normal levels of profit, the WA government earns very little tax
revenue from the resource industry. The Minister has seen the news coverage of the
current lithium surplus causing economic losses, and that the mining industry already
anticipates the substantial rise in lithium demand expected in the mid-2020’s as electric
car production increases. The Minister has also seen confidential information that the
Chinese government, as part of its efforts to address climate change, might announce a
requirement that all car sales be electric starting in Q1 2021, but will not announce this
plan until Q1 2020. If this occurs, it would cause a very large additional rise in electric
car production, and the lithium industry remains unaware of this potential
announcement.
Please advise the minister on whether the WA government can project substantial
revenue from taxing lithium mining profits when it creates its 2021 budget.
3. The WA Environmental Protection Agency reports that every tonne of rare-earth mining
causes a large harm—and this harm is constant for each tonne—from water pollution
that impacts nearby local communities. The EPA has proposed internalizing this
externality through a tax applied to each unit of pollution, and this tax would equal the
environmental damages of the pollution. The Minister for Mines is concerned about the
impact of this proposed tax on the mining industry. In particular, the Minister has seen a
recent presentation from the lithium mining industry where they claim that this
environmental tax will not improve the environment, but instead simply cause industry
to shift abroad. Please brief the Minister on this claim.
4. A source of the rarest rare earth elements has recently opened in WA! This mine is the
first for this element in the world and there are no known other deposits of this
element. The element can be used to make unique high-capacity batteries, but it also
causes the same pollution externality costs on the nearby communities as lithium does.
The EPA has proposed regulating it with the same tax on pollution as lithium. The
Minister requests a briefing on whether this tax will increase economic surplus. (note—
this example is fictional so you will not be able to research such a ‘rarest rare earth
element.’)

 

BUSS5001 Assignment Grading Rubric: Semester 2 2019
Mark 0% 15% 30% 40% 50% 60% 70% 80% 90% 100%
Understanding
and application
of theory
(individual
mark for 1, 2, 3
and 4; 20%
each)

Does not attempt
to or fails to
address the
question, and/or
demonstrates no
understanding or
application of
relevant theory.

Mostly fails to
address the
question and/or
demonstrate
understanding or
application of
relevant theory.

Often fails to
address the
question and/or
demonstrate
understanding or
application of
relevant theory.

Sometimes fails to
address the
question and/or
demonstrate
understanding or
application of
relevant theory.

Demonstrates a
basic, uncritical
application of
relevant economic
theory. Mostly
logical conclusions,
with some
significant
shortcomings.

Demonstrates a
basic, uncritical
application of
relevant economic
theory. Logical
conclusions, with
some
shortcomings.

Demonstrates
basic application of
relevant economic
theory, with some
in-depth analysis in
places. Logical
conclusions. Lacks
critical appraisal.

Demonstrates an
in-depth, though
sometimes
uncritical
application of
relevant economic
theory. Logical
conclusions.

Consistently
demonstrates an
in- depth, and
usually critical
application of
relevant economic
theory. Logical
conclusions.

Consistently
demonstrates

evidence of high-
level thinking, with

in-depth, critical
application of
relevant economic
theory. Logical
conclusions.

Clarity of
expression
(whole
assignment;
15%)

Work was not well
presented or
comprehensible.
Not appropriate for
an academic or
corporate context.

Mostly not well
presented or
comprehensible,
with frequent
errors in spelling,
syntax and
grammar.
Presentation,
layout, and
structure needs
major
improvement.

Often not well
presented or
comprehensible,
with frequent
errors in spelling,
syntax and
grammar.
Presentation,
layout, and
structure needs
significant
improvement.

Sometimes
incomprehensible,
with regular errors
in spelling, syntax
and grammar.
Presentation,
layout, and
structure needs
improvement.

Coherent, but with
regular errors in
spelling, syntax and
grammar.
Presentation and
layout consistently
had room for
improvement.

Coherent, but with
regular errors in
spelling, syntax
and/or grammar.
Presentation and
layout left
significant room
for improvement.
Clearly
communicated, but
with occasional
errors in spelling,
syntax and/or
grammar.
Generally well
structured, but
overall appearance
left some room for
improvement.

Very clearly
communicated
with only minor
errors in spelling,
syntax or grammar.
Consistently well
structured.
Appearance left
some room for
improvement.

Almost publication
standard in an
academic or
corporate context.
Very clear writing
and presentation,
with clear layout.
Only minor
grammatical or
syntactical errors.

Publishable in an
academic or
corporate context.
Extremely clear
writing and
presentation, with
clear layout. No
spelling,
grammatical or
syntactical errors.