ECO10005 Economics for Business Decision Making Assignment Questions - Sem 1 2025

ECO10005 Question 1  

Use the graph presented below for Yolanda's Frozen Yoghurt Stand to answer the questions that follow.

1. Use the midpoint formula to calculate the price elasticity of demand for D1 between point A and point C and the price elasticity of demand for D2 between point A and point B. You must include all your calculations step by step. (1 mark)  
2. Explain which demand curve is more elastic D1 or D2? (1 mark)

ECO10005 Question 2

Apple adjusts its pricing strategy to compete with Samsung in the smartphone market. Given the following information:

• Initial price of an iPhone = $1000
• New price of an iPhone = $1160
• Initial quantity demanded = 500,000 units
• New quantity demanded = 380,000 units
• Initial quantity supplied = 500,000 units
• New quantity supplied = 564,000 units

Required:

1. Using the midpoint formula, calculate the price elasticity of supply (PES). (0.5 mark)
2. Using the midpoint formula, calculate the price elasticity of demand (PED). (0.5 mark)
3. Calculate the % changes in Qd and Qs then discuss the more likely scenario for equilibrium price. (1 mark)

ECO10005 Question 3

Alexandra Moore owns a furniture rental store. She leases two trucks for delivering furniture, with a daily lease cost of $40 per truck. She cannot increase the number of trucks she leases without providing the leasing company with a 10-week notice. Additionally, she can hire as many delivery workers as she needs, at a daily cost of $60 per worker. The following table provides information about the number of workers hired, the daily output of furniture deliveries, and the corresponding costs.

1. Fill in the missing columns in the table for Fixed Cost (FC), Variable Cost (VC), Total Cost (TC), Average Total Cost (ATC), and Marginal Cost (MC). (Enter all cost values as integers and round ATC and MC to two decimal places.) (1 mark)
2. Use Excel to create a graph of the Average Total Cost (ATC) curve for output levels of 800, 1,500, 2,200, 2,700, 3,000, and 3,200. Note that costs are now expressed in cents per delivery. Label the curve 'ATC.' (0.5 mark)
3. Use Excel to create a graph of the Marginal Cost (MC) curve for output levels of 800, 1,500, 2,200,
   2,700, 3,000, and 3,200. Note that costs are now expressed in cents per delivery. Label the curve 'MC.' (0.5 mark)

Question 4 

Suppose the company White Cabs is the sole authorised operator of taxicabs in Fairville, a city of about two million people.   

1. With the aid of a revenue-cost diagram, explain and illustrate the company's decisions with regard to output (how much service it provides) and price.  What kind of market structure are you assuming here?  Would you expect White Cabs to make super-normal (or above-normal, or economic) profit?  Briefly explain the latter concept. (1 mark)   
2. Now suppose the government allows the owner of any car to operate it as a taxi without any restriction.  What would happen to profitability in the taxicab business?