ECF1100: MICROECONOMICS
Answers to tutorial 3
Chapter 4, Problem 2
The statement is false in general. As Figure 4.11 shows, the increase in demand for notebooks
results in an increased quantity supplied. The only way the statement would be true is if the
8
To explain the observation that spending on restaurant meals declines more during economic
downturns than does spending on food to be eaten at home, economists look at the income elasticity
of demand. In economic downturns, people have lower income. To
6
a
b
c
With a 4.3 per cent decline in quantity following a 20 per cent increase in price, the price
elasticity of demand is only 4.3 / 20 = 0.215, which is fairly inelastic.
With inelastic demand, the revenue rises when the fare rises.
The elasticity est
7
Toms price elasticity of demand is zero, since he wants the same quantity regardless of the price.
Jerrys price elasticity of demand is one, since he spends the same amount on gas, no matter what the
price, which means his percentage change in quantity
9
a
b
c
With a price elasticity of demand of 0.4, reducing the quantity demanded of cigarettes by 20 per
cent requires a 50 per cent increase in price, since 20 / 50 = 0.4. With the price of a pack of
cigarettes currently at $8, this would require an incr
10 a The floods caused a decrease in market supply but this decrease was not uniform among growers.
Any vineyard owners who were not affected by the floods could produce the same output, and sell at
a higher market price. These vineyard owners would thus
1
2
3
4
The price elasticity of demand measures in relative terms how much the quantity demanded responds
to a change in price. The income elasticity of demand measures in relative terms how much the
quantity demanded changes as consumer income changes.
T
4
a
As Figure 5.2 shows, the hurricane in Colombia causes the supply of beans to contract (S 1 shifts
to S2) and the price of coffee beans rises.
Figure 5.2
b
Given coffee beans are an input into coffee drinks, this will shift the supply curve for cups of
1
a
b
c
d
2
a
b
3
a
b
Mystery novels have more elastic demand than required textbooks, because mystery novels have
close substitutes and are more of a luxury good, while required textbooks are more of a necessity
with no close substitutes. If the price of
8
9
If there is a fixed quantity of the good, then the price elasticity of supply is zero. No matter how high
price rises, no more can ever be produced.
If a cyclone was to destroy half of Australias banana crop, then it is more likely this will hurt bana
5
a
b
If Emily always spends one-third of her income on clothing, then her income elasticity of demand
is 1, since maintaining her clothing expenditures as a constant fraction of her income means the
percentage change in her quantity of clothing must equa
Topic 1: Markets and
Trade
Learning Objectives
Having a strong understanding of the concept of opportunity cost and how to apply it
Understand the basic sources of gains from trade including comparative advantage, and be able
to determine the direction of
Topic 2: Perfectly
Competitive Market and
Government Policy
Learning Objectives
Understand the concepts of, and assumptions underpinning, individual and market demand and
supply curves
Understand how changes in external factors (such as income or the pric
Topic
3:
Markets,
Welfare
and
Policy
Under Perfect
Learning Objectives
Understand how to determine and interpret consumer surplus
Understand and critically analyse the dollar is a dollar assumption
Understand and be able to derive producer surplus includi
In Excel, click on Help. Type in data analysis toolpak and click the top option.
In the screen that opens click on
the outlined hyper-link
Click on Download on the bottom
of the webpage that opens up.
Click on the Download button again, and the file will
1
2
Interactive
Lecture Five
Please remember to bring Statistical Tables to this Lecture
ETF1100
Sampling and Sampling Distributions
Business
Statistics
LC Qn 1
3
4
Sources of Error in Sampling
Learning Objectives
(Weeks 5 - 8)
Two types of error in sampl
1
2
Pre Class Video
Sampling Distribution
Please remember to bring Statistical Tables to this Lecture
ETF1100
Sampling Distributions
Business
Statistics
4
Sampling Distributions
In the workplace,
calculating the parameter of a population is impractical
be
1
ETF1100
Business
Statistics
2
Interactive
Lecture Six
INFERENCE I:
Please remember to bring Statistical Tables to this Lecture
Confidence Interval Estimation
Mean
Proportion
3
Confidence Intervals known
Confidence
Intervals
Population
Mean
known
Never
GST
Goods and Services Tax is applied to most sales of goods and provision
of services in Australia at a rate of 10%.
Exemptions: essential foods, interest, residential rent, water rates,
health services
Paid by final consumer
Will be relevant for most
1
Pre Class Video
The Normal Distribution
Standardising
ETF1100
Business
Statistics
2
PROBABILITY II:
Please bring Statistical tables to Interactive Lectures
Probability Distribution Continuous
The Normal Distribution
Standardising from X to Z
3
Standard
1
Pre Class Video
Sampling and Sampling Error
2
Please remember to bring Statistical Tables to this Lecture
Sampling and Sampling Error
ETF1100
Business
Statistics
3
4
Introduction to Statistical Inference
Introduction to Statistical Inference
Recall the
1
Pre Class Video
Sampling and Sampling Error
ETF1100
Business
Statistics
2
Please remember to bring Statistical Tables to this Lecture
Sampling and Sampling Error
3
Introduction to Statistical Inference
Recall the 2 major areas of statistical methodology
1
Pre Class Video
The Normal
Distribution
ETF1100
Business
Statistics
2
PROBABILITY II:
Please bring Statistical tables to Interactive
Lectures
Probability Distribution Continuous
The Normal Distribution
3
The Normal Distribution
Most important probabili
Microeconomics Notes:
Learning Outcomes of this Unit:
1. Understand the economic behaviour of individual consumers and
producers.
2. Understand concepts relating to the cost of production in both the short
and long
Midpoint formula (need to work on, when to use it? What is the information
given)
Expenditure and elasticity relationship (question I got wrong)
More narrowly defined markets have a higher PED (e.g. Toyota car is a more
narrowly defined market, hence it h