BUSI1117 Introduction to Economics
2019-2020 Autumn semester
Marks accounted for: 30% of the total mark
Deadline for submission: Turnitin via Moodle by 4PM on 2 December, 2019
Word limit: strict maximum of 1500 words
Answer one question from the following list of topics
- Fruit market.
There has been a sharp rise in fruit prices since this May. According to the news, in June 2019, fruit prices rose by 42.7%, contributing to a rise in the Consumer Price Index of 0.71%. Pears and apples are the fruits with the largest price rise. The price of Fuji apples was about RMB 13 per kg this June, compared with RMB 6.32 per kg last June. The price of pears was RMB 9.32 per kg this June, compared with RMB 3.5 per kg last June.
Using microeconomic models, explain the reasons for the rise in fruit prices.
Apples and pears traditionally rank largest and third largest in total output for China’s fruit market. Discuss the likely impact of the rise in apple and pear prices on the fruit market. Are the high prices likely to be alleviated through market forces? If the government wants quicker results, what methods could it use to influence the price? Critically evaluate the pros and cons of government intervention in the fruit market.
- Tobacco tax.
China is the largest tobacco manufacturing country. It has more than 300 million smokers according to some conservative estimates. Tobacco tax is an important type of tax in China. According to China’s State Taxation Administration, in 2005, among the top 100 companies by tax payments, 35 were tobacco companies. The top ranked tobacco firm (ranked 6), Red Cloud Tobacco (Group) Co., Ltd., paid more than RMB 12.5 billion in tax in that year. It is estimated that the tax revenue from tobacco companies accounts for about 6% of total tax revenue for China.
With this background, discuss the purposes of imposing tobacco taxes in China. Use microeconomic models to describe the economic impact of the tobacco tax on the tobacco market. Furthermore discuss the welfare implications of the tobacco tax. Is the burden of tobacco taxes felt more on tobacco producers or consumers? Will the result will be the same if the tobacco tax is imposed on consumers instead of producers?
- Movie ticket
Movie theaters often offer discount tickets to customers. For instance, a typical pricing policy from Wanda Cinema is as follows:
– every day before 12pm, 2D movies are 50% off and 3D/IMAX movies are 30% off
– On each Tuesday, 2D movies are 50% off and 3D/IMAX movies are 30% off
– Students with valid certificates can enjoy 50% off on 2D movies and 30% off on 3D/IMAX movies
– Military officers, the elderly and the disabled can enjoy 50% off on 2D movies and 30% off on 3D/IMAX movies with valid certificates.
Using microeconomic models, discuss what type of pricing strategy movie theaters adopt in providing such differentiated prices. Why do movie theaters offer such pricing policy to moviegoers? What are the welfare implications of such a policy? Is such a pricing policy fair? Why or why not?
- Choose one topic from this list and perform a microeconomic analysis regarding the specific question.
- Treat the reader as intelligent, but not necessarily knowledgeable about the technical microeconomic concepts or the issue you are discussing.
- Do not use bullet points, but elaborate your arguments with supporting evidence
Lecture 7 Market structure and monopoly
- The assignment should be in a Word file, using 1.5 lines spacing, on A4 paper with Normal (2.5cm) margins and the font should be Times New Roman 12 point.
- The essay should be strictly less than 1500 words (excluding bibliography, figures and tables). The word count of the assignment must be stated on the first page (cover sheet). Failure to adhere to the maximum word limit will induce a penalty of 5% deduction off the total mark.
- Your assignment must be submitted by 4PM on 2 December, 2019 via Turnitin. As per University regulations, coursework submitted after this deadline will be subject to a 5 mark penalty per working day until the mark reaches zero.
Help with the Essay
- General information concerning coursework writing will be offered in an essay workshop designed specifically for this module, offered by CELE. Details will be announced on Moodle. The workshop slides will also be posted on the Moodle.