ECO0006 Economics for Managers
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ECO0006 Economics for Managers
Diploma in Banking and Finance
Diploma in International Business
October 2023
Continuous Assessment 1 (Individual Assignment: 50 marks)
30% of Final Grade
Question 1 (10 marks)
Use the information given to answer the questions below.
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Genetics and AI: The tech that goes into growing strawberries in Singapore SINGAPORE: Juicy strawberries, plucked from the vine and into my mouth – this was not something I was expecting to taste in sweltering Singapore. The fruit is the yummy result of years of research into how key genes affect plant growth by Singrow CEO and co-founder Bao Shengjie and his team. “We managed to cross-breed and developed the world’s first tropical strawberries, that adapt well to warmer climate conditions. They also grow faster – going from the nursery to harvest in about two months, or about 30 percent faster than the norm, said Dr Bao. But strawberries are just the testbed for the technology. Singrow will provide the outdoor farms with its crop varieties, starting with strawberries. It will also work with the farms to improve their farming techniques for existing crops, with plans to reduce their fertiliser use by 30 per cent and pesticide use by 70 percent. Source: www.cna.com.sg, 12 April 2023 |
(a) If Singapore produces cars and strawberries, use a Production Possibility Curve (PPC)
diagram to illustrate and explain the impact of the development in paragraph 1. (4 marks)
(b) If Singapore produces strawberries and vegetables, use a PPC diagram to illustrate and explain the impact of the development in paragraph 2. (4 marks)
(c) On your diagram in part (b), mark out a combination of output that illustrates the concept of scarcity. (2 marks)
Question 2 (22 marks)
(a) Use information from the passage to answer the questions below.
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Tokyo Disneyland & Universal Studios Japan set to raise 1-day ticket prices to nearly S$100 One-day admission tickets for adults to Universal Studios Japan and Tokyo Disneyland will soon increase to nearly S$100. The increase comes as inflationary pressures grip Japan, compounded by a weakened yen and high operational costs. Increase in prices to ease visitor traffic. This was done “in order to minimise the difference in the number of guests visiting the parks on weekends and weekdays”. Tickets are expected to reach their peak price on weekends and holidays such as Christmas, and will be priced the cheapest during weekdays.
Source: Extracted from www.mothership.sg |
(i) Identify a factor of supply from the passage that led to the rise in the price of 1- day tickets to Tokyo Disneyland & Universal Studios Japan. Use a market diagram to aid your explanation. (4 marks)
(ii) Use a demand diagram to explain how the increase in price can “ease visitor traffic” . (4 marks)
(iii) Use the concept of price elasticity of demand to explain how the pricing policy in
the last paragraph will help to “minimise the difference in the number of guests visiting the parkson weekends and weekdays”. (Hint: Consider the price elasticity of demand for weekday tickets vs weekend tickets.) (6 marks)
(iv) Based on your answer to part a(iii), use a relevant diagram to illustrate and explain
how a rise in the price of a 1-day ticket during the weekend will affect total revenue. (4 marks)
(v) If the price elasticity of demand for the most expensive Adult 1-Day Passport is -0.8, calculate the percentage change in quantity as a result of the rise in price. Use information in the table to answer the question. (4 marks)
Question 3 (18 marks)
The following table provides information about a firm that produces toothpaste. Use the information to answer the questions below and show all working clearly.
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Toothpaste (Units) |
Total Cost ($) |
|
0 |
30 |
|
10 |
90 |
|
20 |
140 |
|
30 |
240 |
|
40 |
360 |
(a) State the value of the fixed cost incurred by the firm. (2 marks)
(b) State the period of production that the firm is operating in. (2 marks)
(c) Calculate the average variable cost incurred by the firm to produce 20 units of toothpaste. (2 marks)
(d) Calculate the marginal cost incurred by the firm to increase its output of toothpaste from 30 units to 40 units. (2 marks)
(e) Calculate the average fixed cost incurred by the firm if it were to produce 50 units of toothpaste. (2 marks)
(f) If the firm is a price-taker, state the market structure that it operates in. (2 marks)
(g) If the market equilibrium price is $10, use the profit-maximising condition to find the optimal output of the firm and calculate the profit at this level of output. (4 marks)
(h) Based on your answer to part (g) identify the type of profit made. (2 marks)
2023-11-05