Study Guide for Module: Economics

This Study Guide is designed to provide you with details of this module;  the learning outcomes; delivery and assessment arrangements. The Study Guide consists of 6 parts.

Part 1 gives background details to the subject area are provided and the broad aims of the module are set out.

Part 2 consists of the module outline. In this part, the (a) module learning outcomes, (b) the themes and topics to be explored are explained along with the (c) learning supports to be used.

Part 3 gives details of the module delivery arrangements. It sets out the session arrangements and the expectations in relation to your prior preparation and student engagement. The provisions for online provision are outlined in terms of class delivery and any module work with classmates.

Part 4 provides details of the assessment techniques used in this module explaining the assessment components and their rationale.

Part 5 explains the UCD grading policy and grade descriptors drawing on the university document are given for each assessment component for the module.

Part 6 presents the concluding comments.

The module aims to provide a thorough understanding of the theory and practice of economics at an introductory level and provides the basis for all subsequent study you may undertake in economics. The first part covers the principles of microeconomics and the second part develops a framework for understanding the multisided platform business model. Throughout the module and in the seminars,  in particular,  we demonstrate the usefulness of economics as an analytical tool for thinking about real-world problems.

The module draws on student prior learning and work experience and combines insights from production and costs to market strategy,  government policies to market barriers,  international trade to market expansion,  firm behaviour and market innovation and other areas.

The assessment tasks for this module have been designed with this in mind as detailed later in the study guide.

On completing this module, students will be expected to be able to: 

1. Understand and describe the key features and challenges in relation to allocation.

2. Demonstrate an understanding of firm behaviour within a single-sided platform setting.

3. Explain the importance of networks in economies.

4. Describe the implication of increased interconnectedness on the allocation process.

(a) Discuss whether the following statements are true or false. Justify your answers.

(i) An increase in price results in an increase in supply, causing the supply curve to shift to the right, but not an increase in the quantity supplied.  (5 marks)

(ii) An improvement in technology, such as a widespread use of FinTech,  will shift the supply curve of banking services rightward.  (5 marks)

(b) Consider the international oil market. China is a large oil consumer in the international oil market but China’s decreasing growth recently has reduced its oil imports from the international market. At the same time,  the Organisation of Petroleum Exporting Countries (OPEC) which controls about 50% of world oil production has reached an agreement to reduce oil production.

Discuss the effects on the equilibrium price and quantity in the international oil market.   Use suitable market diagrams to support your answers.  (15 marks)

(a) Singapore recently formed an air travel bubble with Hong Kong. Suppose that business travellers and vacationers have the following demand for airlines tickets from Singapore to Hong Kong:

As the price of the ticket rises from $300 to $350, calculate the price elasticities of demand for business travellers and vacationers, using the mid-point method. Give a proper interpretation of your answers.

How does this information help the airlines that provide flight service to Hong Kong in making business decisions?  (15 marks)

(b) Consider two goods A and B with income elasticity of demand -2.5 and 0.8 respectively. During a recession where consumers’ income generally decreases,  both sellers of A and B will earn higher revenue. Do you agree? Explain.  (10 marks)

 Patrick is working as an IT project manager and earning a salary of $50,000 per year. He has decided to quit his IT job and starts his own online business selling furniture. To buy the necessary equipment, he withdrew his savings of $20,000 from his bank,  where it had been earning interest of 5% per year. He converted a room in his apartment to operate the business. Prior to the furniture business,  the room was rented out for $500 per month. He also hires an assistant for $1,250 per month. In the first year, he managed to produce 150 tables and 250 chairs. He sold all the tables and chairs at a unit price of $300 and $50 respectively.

a) Calculate the explicit cost, implicit cost, accounting profit and economic profit for the first year. Describe the difference between accounting profit and economic profit. (12 marks)

Based on your calculation in (a), will you advise Patrick to continue the business or return to his IT job? Explain.  (3 marks)