ECON1610 Economic and Quantitative Analysis Individual Assessment 3 Questions | RMIT

ECON1610 Assessment Declaration

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[Note: Delete all the text of the questions and instructions given in square brackets and simply retain question numbers and subpart numbers with each question while submitting your final document. Read the instructions document (available on canvas) carefully.]

ECON1610 Section A

[This section includes two mandatory questions. Please adhere to the instructions and word limits provided for each question and its sub-parts.]

Question 1 [7 marks]

[ There are 8 potential buyers (A, B, C…, H) for a bottle of premium Yarra Valley Pinot Noir. Each buyer’s reservation price (or willingness to pay) is known to the seller, as shown below. The constant marginal cost per bottle of wine is $28 to the seller. Let us ignore fixed cost.]

• What type of market structure is described in the scenario? Explain your reasoning in a sentence. (1 mark)
• Using the information provided, draw the demand curve for the seller of premium Yarra Valley Pinot Noir. (3 marks)
• Calculate the seller’s Total Revenue (TR) and Marginal Revenue (MR) at different quantities of wine bottles sold. Present your calculations in a table format. (2 marks)
• If the seller must charge the same price to all buyers, what is the profit-maximizing price and quantity? (1 mark)

Question 2 

[8 marks]

The coronavirus pandemic and resultant shutdown measures to contain it have plunged the economies around the world, including Singapore, into contraction. Assuming the Singaporean economy was in long-run equilibrium in the aggregate demand and supply (AD-AS) model before the pandemic (consequent shutdown) started, answer the questions below:

• Assuming the contraction in the Singaporean economy is primarily driven by demand-side factors, illustrate the short-run effects using the AD-AS model in a diagram. In 100 words or fewer, explain the two potential demand-side factors that could lead to this contraction. (2+1 = 3marks)
• Now, assuming that the contraction in the Singaporean economy is mainly driven by supply-side factors, show the short-run effects of this using the AD-AS model in a different diagram (not the one from part a). In 100 words or fewer, discuss two supply-side factors that could lead to this contraction. (2+1 = 3marks)
• Which of the above-mentioned two recession scenarios can be better handled by policymakers (the government and the central bank)? and why? (explain in 50 or fewer words). (2marks)

ECON1610 Section B

You must use Microsoft Excel and the Data Analysis ToolPak for this section. Submit a well-organized Excel file to verify your analysis and answers.
This section will not be graded without the required Excel file.
A penalty of 2 marks will be applied if the Excel file is unclear or poorly organized.

Question 1

[19 marks]

In the file “Assessment 3 Data.xls” (available on Canvas), you’ll find information on per capita GDP and CO2 emissions for 186 countries in the worksheet “Data (Across Countries)”. Choose any 30 countries from this dataset and complete the following analysis:

• Concentrate on the CO2 variable. First, create a histogram in Excel to show the distribution of CO2 emissions for your selected countries. You may set the class width as you prefer. Next, use the Excel Data Analysis Tool Pack to generate descriptive statistics for the CO2 variable. Include the Excel graph and table here. In no more than 150 words, describe the key characteristics of the histogram and the descriptive statistics. (2+1+2 = 5 marks)
• Next, analyse the relationship between CO2 emissions per capita and GDP per capita for your selected countries by creating a scatter plot in Excel. Include the scatter plot here and provide a summary of your main observations about the relationship between these two variables in 50 words or fewer. (2+1 = 3 marks)
• Using (the same) data for your selected 30 countries, carry out simple linear regression to estimate the relationship between CO2 emissions (Y) and GDP per capita (X) using the Data Analysis Toolpak in Excel. Based on the Excel regression output, first write down the estimated regression equation and interpret the slope and intercept coefficients. Last, use the value of R-square for your estimated regression model to comment on the fit of the model in 3-4 sentences. (1+2 + 2 = 5 marks)
• Test whether there is a significant linear relationship between CO2 emissions and GDP per capita at the 5% significance level. Conduct a two-tailed hypothesis test of the slope coefficient using the t-test and p-value approach, and explain your results. Use the t-statistic and p-value from the Excel regression output. (4+2 = 6 marks)

Question 2

[6 marks]

In the file “Assessment 3 Data.xls” (available on Canvas), you’ll find information on GDP per capita (constant 2015 US$) for 15 countries in the worksheet “Timeseries Data GDP”. Choose any country of your liking from this dataset and complete the following analysis:

• Estimate autoregressive (AR) models of order 3, 2, and 1 for the GDP per capita series of your chosen country. Present the results in three separate tables (one for each model). (1+1+1 = 3 marks)
• [Based on the p-value approach at the 5% significance level (α = 0.05), identify the most appropriate AR model and use it to forecast GDP per capita for 2025. (2+1 = 3 marks)