ECO511: Economics for Business

Learning outcomes

On successful completion of this subject, you should:

be able to apply demand and supply analysis to make a range of market related decisions

be able to identify and critically evaluate opportunities for specialisation and exchange

be able to make decisions that incorporate the relevant benefits and cost analysis

be able to explain and defend why it is important to understand the structure of the market in which a firm operates

be able to critically examine and demonstrate why it might be necessary for government to intervene in the production of goods and services and in the distribution of income

be able to examine critically the health of the economy as a whole through the analysis of major economic variables and advise on likely policy alternatives.

Task

Assignment 1 consists of two short answer questions (worth 5 marks each) based on Text material.

Before attempting this assignment you are expected to have read Text chapters 1, 2, 3 and 4. Sources used in your answer should be fully referenced in APA 6th style.

Answer the following questions ensuring that you apply economic principles or theory related to (a) the concepts of supply and demand for Question 1 and (b) the concepts of specialisation and exchange for Question 2 to inform your analysis and support your decisions. Communicate your ideas with

correct grammar, spelling and writing style and support your answers with diagrams as necessary.

Question 1

As a producer, why is it important to consider the price elasticity of demand of your product when setting the price you are going to charge?

Question 2

Explain the difference between comparative advantage an absolute advantage.