Economics

This assessment is a 2,000 words essay (10% flexibility either way) covering the concepts of
markets and elasticity of the demand. The assessment contains two questions, they are:
(a) Interpret the following empirically-estimated own-price elasticity of demand for cereals
in Australia. If you were the marketing manager of a cereal manufacturing company, how
would you use this information?
Cereal Price Elasticity of
Demand
Sultana Bran -2.5
All family breakfast cereals (such as Corn Flakes,
generally)
-1.8
All types of breakfast cereals -0.9

(b) Indonesia has a highly regulated airline sector with rules and fare levels that vary
depending on an airlines business model. The government has a ceiling price for every
domestic route. Airlines classified as full-service can charge up to 100% of the ceiling price
while airlines characterized as medium service can charge up to 90% and no frills airlines
up to 85%. Indonesia also has a price floor which, in theory, prohibits airlines to charge
less than 30% of the ceiling price. What are the economic arguments against price floors
and ceilings? What might be the governments rationale for this regulatory intervention?
Your essay should consist of an introduction where you present the purpose of the work.
Divide the main body of the essay into two distinct sections, addressing questions (a) and (b)
respectively. You can have several paragraphs under each section. End your essay with a
conclusion. You should also include a page listing the references. I am not expecting an
executive summary or abstract.
Submission guidelines
Typed in format specified (refer to CALS) and to be submitted in electronic form as a
word-processed file to www.turnitin.com before Saturday 20th August 11:59pm (Week
7).
Please note that plagiarism is a serious academic offence. Please refer to CALS for a
better understanding on how plagiarism is detected and prevented.
Professional layout and presentation, concise, informative and correctly referenced.
Graphs and colour can assist in summarizing key points in your report.
You must work on the assignment questions progressively each week – which will
prevent you from rushing at the end. Remember your quiz is in week 6 and this
assessment is due in week 7.
Answers must be complete, addressing the specific tasks nominated in the questions.
To grade your understanding of concepts, I need to understand what you have
written. So, it is absolutely critical that your assignment is written in clear English and
is free of grammatical errors. If I do not understand what you have written, I cannot
award marks.
Include a school assessment cover sheet clearly documenting your student id.
DO NOT submit the marking guide with your paper.
Complete and attach a plagiarism form.
Diagrams, if required, must be drawn properly, correctly labeled and the relations they
depict explained.
Photocopied and scanned graphs from books, articles or websites are not acceptable
such a practice will be penalized with a 0 being awarded. It is preferable to hand draw
a graph then scan it to insert in your file, if you cannot draw using computer
software.
Besides the textbook, you should also refer to a few other academic books, journal
articles and relevant websites in answering these questions.
You must refer, in text, to a minimum of 8 journal articles, plus others as required,
in order to show competency in the assessment. Failure to meet this standard will
result in a fail grade for this assessment.