Word limit - 1,100 The 'Written Assignment' comprises seven individual 'tasks', split into three parts. This part, Part B, covers the topics of elasticity, costs of production, market power and business strategy and is worth 20%. In this assignment the questions will cover the following four tasks: Task 2: Elasticity Task 3: Costs of production Task 4: Market power Task 5: Business strategy This assignment comprises of 13 questions which you'll answer and submit. Related learning outcomes This assignment assesses the following unit learning outcomes: Use economic indicators and models to understand and analyse real-world situations. Use economic concepts and knowledge to understand, explain and evaluate decision making by individuals, firms and government. Describe economic outcomes in markets and how these are affected by market structure and the macroeconomic environment. Identify appropriate business strategies and government policy to achieve positive outcomes (such as increase profit, reduce market failure, or stabilise macroeconomic fluctuations). Analyse current economic issues and determine/evaluate responses by the relevant economic agents. Task 2: Elasticity For each pair of items in Questions 1 and 2, determine which product is more price elastic. Explain your answer including identifying the determinant of elasticity. Question 1. 3D television and prescription Medication. (1 mark) Maximum number of words: 60. Question 2. Coffee sold in a cafe and electricity (assume limited excess capacity). (1 mark) Maximum number of words: 60. In the following graph, the demand for tyres has shifted to the left because the price of cars has increased from, on average $25,000 to $35,000 per car. Use the graph to answer Question 3. Question 3. Calculate the cross-price elasticity of demand between tyres and cars. Show your calculations and explain your answer in words. (2 marks) Maximum number of words: 80 + calculation. - ATTACHMENT 1 Task 3: Costs of production Explain whether the following events in questions 1 and 2 will affect fixed costs or variable costs (make sure you justify your answer): Question 1. The federal government applies a licence fee on every ‘television network’ of 1 million AUD. (1 mark) Maximum number of words: 40. Question 2. Samsung signs a new contract changing the price it pays for ‘power boards’ that are used in its TVs. (1 mark) Maximum number of words: 40. Read the following excerpt and answer Question 3. The world's largest passenger plane [Airbus] has proven to be the most expensive civilian airplane ever developed. Airbus claims its fuel efficiency, control system and sound-reduction technology also make it the most advanced airliner ever built. The Dreamliner travels the same distance as the A380 [Airbus] at the same speed but carries half the passengers. Source: Airbus and dreamliner battle for air space (Links to an external site.)Links to an external site. (Coburn 2010). Question 3. You are an executive in an airline company that uses both Dreamliner and Airbus planes. Thinking of the long run, when might it be best to use the Dreamliner? When might it be best to use the Airbus? Use the long run average total cost curve in explaining your answer. (4 marks) Maximum number of words: 350. Use the following link: https://www.popularmechanics.com/flight/a5819/airbus-vs-boeing-battle-for-air-space/ Task 4: Market power Question 1. Graph and explain the situation for Adidas if it was the only seller of exercise running shoes in Australia. Contrast this with the situation when many other brands enter the market selling similar products. Use a graph and explain your answer. When drawing graphs assume the firm is in the long run. (2 marks) Maximum number of words: 120 + Graph Question 2. There are many cattle farms in the world, and there are also many McDonald's restaurants in the world. Why, then, does a McDonald's restaurant face a downward-sloping demand curve while a cattle farms face a horizontal demand curve? How would this situation change if there were two McDonalds restaurants located next to each other? (2 marks) Maximum number of words: 200. Task 5: Business strategy Consider the example where Jim’s Coffee (they seem to sell everything else) wants to open a store but a major existing company, Stars and Coffee, threatens Jim’s by saying, 'If you enter I will charge lower prices.' The pay-off matrix is below. Answer questions 1 to 5. Use attachment 2 Question 1. Define dominant strategy. (1 mark) – Maximum number of words: 50. Question 2. Does Jim's coffee have a dominant strategy? (1 mark) Maximum number of words: 80. Question 3. Does Stars and Coffee have a dominant strategy? (1 mark) Maximum number of words: 80. Question 4. Define Nash equilibrium. What is (are) the Nash equilibrium(s) in this game. Explain. (2 marks) Maximum number of words: 150. Question 5. Should Jim’s coffee believe Stars and Coffee's threat? Explain. (1 mark) Maximum number of words: 100.