Question? Call Us  +1 (817) 546-4770

ECO130 Business Economics (8)

Academic Anxiety?

Get an original paper within hours and nail the task

156 experts online

Free Samples

ECO130 Business Economics (8)

.cms-body-content table{width:100%!important;} #subhidecontent{ position: relative;
overflow-x: auto;
width: 100%;}

ECO130 Business Economics (8)

0 Download7 Pages / 1,617 Words

Course Code: ECO130
University: Charles Sturt University is not sponsored or endorsed by this college or university

Country: Australia


 Question 1 

a)  A farmer is deciding whether or not to add fertiliser to his or her crops. If the farmer adds 1 kilogram of fertiliser per hectare, the value of the resulting crops rises from $80 to $100 per hectare. According to marginal analysis when the farmer should add fertilizer?
b) Bill has $10 that he can spend on a Superman action figure, a Batman graphic novel or an X-Men T-shirt. Bill decides to buy the action figure, even though the graphic novel was a close second choice. What is the opportunity cost of buying the action figure?
c) Wheat farmers across Australia have to sell their produce at one fixed price for all wheat produced. Thus, price does not vary in relation to the individual farmer’s quantity of wheat sold. Draw this type of wheat demand curve and decide what value the slope has.

Question 2:

a) Explain if a firm in the perfectly competitive market would or would not innovate. 
b) What are the two main differences between monopoly and competition? 
c) What happen with firm’s price and revenue operating in competitive market if the firm doubles the amount of output it sells? 

Question 3
The following table shows the quantity of a product demanded at two different prices:

P ($)




a)    Calculate the proportionate change in quantity demanded when price falls from $16 to $14.
b)    Calculate the proportionate change in price when price falls from $16 to $14.
c)    What is the price elasticity of demand between $16 and $14? Interpret the results.
d)    What is the price elasticity of demand between $16 and $14 if you applied the ‘mid point’ formula? Interpret the results.

Question 4:

a) The diagram below shows the demand for and supply of petrol. The market is initially in equilibrium at point x. To which equilibrium point  will the market move from point x after each of the following changes?
i) A rise in the cost of refining petrol.  
ii) A fall in bus and train fares. 

iii) A fall in the price of crude oil and an increase in the price of cars. 
iv) A rise in tax on petrol and a reduction in tax on cars.


When the value of the crops increases $80 to $100 per hectare while adding 1kg of fertiliser per hectare, the farmer can only have profit when the price of the fertilizer will be less than $20 per kilogram (Azevedo & Gottlieb, 2017). The marginal analysis will be calculated as $100-$80= $20. Therefore, there will be again for the farmers and he will produce the fertilizers only when the price of the fertilizers will be less than $20.
With $10 Bill has decided to buy the action figure of the Superman. However, the opportunity cost of buying the Superman action figure is the Graphic novel of the Batman. This is because opportunity cost is the next best alternative that is not chosen (Chodorow-Reich & Karabarbounis, 2016). Here the graphic novel of the Batman was second best choice for Bill after the Superman action figure. Therefore, when Bill decides to pay$10 on an action figure of Superman, a graphic novel of Batman or a T-shirt of X men, the opportunity cost of buying the action figure of Superman will be the Batman Graphic Novel as that is the close second choice of Bill. The X men T shirt could not be the opportunity cost of the action figure as the former was not the second choice of Bill.

 Fig 1: Perfeclty elastic demand
(Source: Kolmar, 2017)
Australian farmers have to produce wheat at a fixed price. Therefore, whatever be the quantity of wheat supplied the farmers cannot alter the price of the wheat and they have sell the wheat at the same price. This is because other farmers are selling the wheat at a particular price, so the Australian farmers will also have to sell wheat at the same price. However, when the farmers will change alter the price of wheat it will lose all it buyers when the price of wheat will be increased. This is a situation of perfectly elastic demand curve where price will not alter along with the change in the quantity supplied (Nagle & Müller, 2017).  This states that a change in price will eliminate all the demand from the market. When there is a perfectly elastic demand consumers can switch to other alternatives.
In a market which is perfectly competitive there is a presence of lots of firms. Therefore, in order to succeed and in order to stay in competition firms will have to innovate and work hard to do something new so that customers are attracted to it. In the modern world developing and producing better services is very necessary. Therefore, a firm in a competitive market need to innovate to perform well in market (Azevedo & Gottlieb, 2017). Had the firm been in a monopolistic market, it could have skipped innovation as it would have been the sole seller of the products. Due to inefficiencies a firm may face huge losses, so firms must innovate new ideas so that it can increase their efficiencies and are not left behind. However, competitive markets can hinder innovation like when there is huge competition in the market and the firms may not earn high profits at that time it is not possible to spend enough money for innovation.
There are many differences between a monopolistic market and a perfect competition market. The first one is the entrance of new firms in the market. In case of perfect competition there is no restrictions on the entrance of new firms in the market. New firms may enter and exit whenever they want ( Zeuthen, 2018). However, in case of monopoly there is a presence of strong barriers on both the entry and exit of the firms in the market. Firms cannot enter or exit in the monopoly market according to their will.
The second one is the output and the price. In case of perfect competition the marginal cost of the product will be equal to the price at the equilibrium output. However, in case of monopoly the price of the product will be always greater than the average cost.
Total revenue is the product of price and quantity. When the firm increases its sale of a product there will be increase in revenue also. When there is double the amount of output sold by the firm the total revenue of the firm also tends to doubles provided the price does not changes (Kolmar, 2017). When a frim sells greater quantity the revenue earn will also increase simultaneously. Therefore, when a firm in the perfectly competitive market doubles the quantity of a product is sells, price remains the same and the total revenue earned also increases twice. Total   revenue consists of the product of the price and the quantity sold therefore, doubling total revenue will result from doubling of the quantity produced.

P ($)




 When price falls from $16 to $14 the change in price is $10. The proportionate change in the quantity demanded will be change in quantity divided by the midpoint of Q
35-25/30 =10/30= 0.33
Therefore, the proportionate change in the quantity demanded will be 0.33
The price will have a proportionate change when it falls down from $16 to $14. The % age change in price when price of the product falls down will be change in the price divided by the midpoint of P
14-16/15= -2/15= -0.13
Therefore, the proportionate change in the price will be -0.13
The price elasticity of demand is calculated by dividing percentage change in quantity demanded by percentage change in price.
From the above answers the percentage change in quantity demanded is 0.33 and the percentage change in price is -0.13. Therefore, by dividing them 0.33/-0.13 the answer is -2.53.
The price elasticity of demand therefore is 2.53.
The mid- point formula of price elasticity of demand is
(Q2-Q1)/[( Q2+ Q1)/2] divided by (P2-P1)/[( P2 + P1 )/2]
=35-25/[(35+25)/2] divided by (16-14)/[(16+14)/2]
=10/30 divided by 10/15
The price elasticity of demand by mid -point method id 2.53

When the refining petrol will be expensive the equilibrium point X will move to h. As price of the petrol increases the supply curve will move from S0 to S2. The supply curve shifts up and the new equilibrium point is at h where the quantity demanded also falls and the price of the petrol increases.
When there is decrease in fares of train and buses the equilibrium point X shifts to The price of the trains and buses that runs on petrol must have gone down because the petrol might have gone cheap. As petrol prices have got cheaper the equilibrium point moves from point X to point f.

The equilibrium point will move from point X to point e when crude oil prices will go down and there will be an increase in the price of cars. The fall in prices of the crude oil makes petrol cheap and as result the demand for crude oil moves from D0 to D2 and supply curve shifts from S0 to S1

When petrol becomes expensive along with a decrease in tax for cars, the equilibrium point will move from X to point As petrol becomes expensive the price of petrol increases and the supply curve shifts up.


Fig2: Price floor
(Source: Horton, 2017).
The minimum price that the government fixed in order to protect the producers is called the price floor. The market price of cheese is p* whereas the government will charge higher price PF which is the price floor (Horton, 2017). The buyers usually buy Q* unit of cheese initially at the equilibrium price.

ii)  There will be an excess supply of the cheese sold of Q(d) Q(s). Due to the price floor the farmers end up supplying excess quantity of cheese.

iii) Yes, it is in some case possible that the price floor has reduced the total revenue received by the farmer from selling cheese. As the government usually charges high price when the market price if cheese is itself low. However, the price may not be very remunerative and the farmers might demand more rise in the price.

iv) When the government buys all the excess cheese at the price floor the producer or the farmer will gain where the buyers will face loss (Horton, 2017). The farmers will receive a huge revenue of which part of the revenue will be provided by the buyers. Both the buyers and the taxpayers will add to the farmers revenue.

Azevedo, E. M., & Gottlieb, D. (2017). Perfect competition in markets with adverse selection. Econometrica, 85(1), 67-105.
Chodorow-Reich, G., & Karabarbounis, L. (2016). The cyclicality of the opportunity cost of employment. Journal of Political Economy, 124(6), 1563-1618.
Herings, P. J. J. (2018). Equilibrium and matching under price controls. Journal of Economic Theory.
Horton, J. J. (2017). Price floors and employer preferences: Evidence from a minimum wage experiment.
Kolmar, M. (2017). Principles of Microeconomics. Springer International Publishing.
Low, P. (2016). International trade and the environment. UNISIA, (30), 95-99.
Mahoney, N., & Weyl, E. G. (2017). Imperfect competition in selection markets. Review of Economics and Statistics, 99(4), 637-651.
Microeconomics, E. E. (2015). KELVIN WONG. Cell, 808, 386-8406.
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Routledge.
Oladosu, G. A., Leiby, P. N., Bowman, D. C., Uría-Martínez, R., & Johnson, M. M. (2018). Impacts of oil price shocks on the United States economy: A meta-analysis of the oil price elasticity of GDP for net oil-importing economies. Energy Policy, 115, 523-544.
Pigou, A. (2017). The economics of welfare. Routledge.
Plantinga, A., Krijnen, J. M., Zeelenberg, M., & Breugelmans, S. M. (2018). Evidence for opportunity cost neglect in the poor. Journal of behavioral decision making, 31(1), 65-73.
Zeuthen, F. (2018). Problems of monopoly and economic warfare. Routledge

Free Membership to World’s Largest Sample Bank

To View this & another 50000+ free samples. Please put
your valid email id.


Yes, alert me for offers and important updates


Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

UploadUnique Document

DocumentUnder Evaluation

Get Moneyinto Your Wallet

Total 7 pages


*The content must not be available online or in our existing Database to qualify as

Cite This Work
To export a reference to this article please select a referencing stye below:


My Assignment Help. (2021). Business Economics (8). Retrieved from

“Business Economics (8).” My Assignment Help, 2021,

My Assignment Help (2021) Business Economics (8) [Online]. Available from:[Accessed 18 December 2021].

My Assignment Help. ‘Business Economics (8)’ (My Assignment Help, 2021) accessed 18 December 2021.

My Assignment Help. Business Economics (8) [Internet]. My Assignment Help. 2021 [cited 18 December 2021]. Available from:

.close{position: absolute;right: 5px;z-index: 999;opacity: 1;color: #ff8b00;}


Thank you for your interest
The respective sample has been mail to your register email id


$20 Credited
successfully in your wallet.
* $5 to be used on order value more than $50. Valid for
only 1

Account created successfully!
We have sent login details on your registered email.


Password: makes buy assignments online easier for students in Melbourne, Brisbane, Adelaide, Perth, Sydney. Students can get highest quality Assignment Help in Brisbane, Perth, Sydney and other cities of Australia only by completing three steps. Students only need to convey their requirements and our experts craft the assignment in an exact manner that our customers want. In case, they need CDR writing services, they can hire our professional CDR writers for strengthening their chances against other applicants.

Latest Management Samples

div#loaddata .card img {max-width: 100%;

MPM755 Building Success In Commerce
Download :
0 | Pages :

Course Code: MPM755
University: Deakin University is not sponsored or endorsed by this college or university

Country: Australia

The process of developing a successful business entity requires a multidimensional analysis of several factors that relate to the internal and external environment in commerce. The areas covered in this current unit are essential in transforming the business perspective regarding the key commerce factors such as ethics, technology, culture, entrepreneurship, leadership, culture, and globalization (Nzelibe, 1996; Barza, 2…

SNM660 Evidence Based Practice
Download :
0 | Pages :

Course Code: SNM660
University: The University Of Sheffield is not sponsored or endorsed by this college or university

Country: United Kingdom

Critical reflection on the objective, design, methodology and outcome of the research undertaken Assessment-I
Smoking and tobacco addiction is one of the few among the most basic general restorative issues, particularly to developed nations such as the UK. It has been represented that among all risk segments smoking is the fourth driving purpose behind infections and other several ailments like asthma, breathing and problems in the l…
Australia Maidstone Management Business management with marketing University of New South Wales Masters in Business Administration 

BSBHRM513 Manage Workforce Planning
Download :
0 | Pages :

Course Code: BSBHRM513
University: Tafe NSW is not sponsored or endorsed by this college or university

Country: Australia

Task 1
1.0 Data on staff turnover and demographics
That includes the staffing information of JKL industries for the fiscal year of 2014-15, it can be said that the company is having problems related to employee turnover. For the role of Senior Manager in Sydney, the organization needs 4 managers; however, one manager is exiting. It will make one empty position which might hurt the decision making process. On the other hand, In Brisba…

MKT2031 Issues In Small Business And Entrepreneurship
Download :
0 | Pages :

Course Code: MKT2031
University: University Of Northampton is not sponsored or endorsed by this college or university

Country: United Kingdom

Entrepreneurial ventures
Entrepreneurship is the capacity and willingness to develop, manage, and put in order operations of any business venture with an intention to make profits despite the risks that may be involved in such venture. Small and large businesses have a vital role to play in the overall performance of the economy. It is, therefore, necessary to consider the difference between entrepreneurial ventures, individual, and c…
Turkey Istanbul Management University of Employee Masters in Business Administration 

MN506 System Management
Download :
0 | Pages :

Course Code: MN506
University: Melbourne Institute Of Technology is not sponsored or endorsed by this college or university

Country: Australia

An operating system (OS) is defined as a system software that is installed in the systems for the management of the hardware along with the other software resources. Every computer system and mobile device requires an operating system for functioning and execution of operations. There is a great use of mobile devices such as tablets and Smartphones that has increased. One of the widely used and implemented operating syste…
Australia Cheltenham Computer Science Litigation and Dispute Management University of New South Wales Information Technology 


Need an essay written specifically to meet your requirements?

Choose skilled experts on your subject and get an original paper within your deadline

156 experts online

Your time is important. Let us write you an essay from scratch

Tips and Tricks from our Blog

PROJ6016 Employer Based Project

Free Samples PROJ6016 Employer Based Project .cms-body-content table{width:100%!important;} #subhidecontent{ position: relative; overflow-x: auto; width: 100%;} PROJ6016 Employer

Read More »

PPMP20009 Marking Rubric

Free Samples PPMP20009 Marking Rubric .cms-body-content table{width:100%!important;} #subhidecontent{ position: relative; overflow-x: auto; width: 100%;} PPMP20009 Marking Rubric

Read More »