Business Economics

TASK
The assignment consists of two parts. Part A has ten multiple choice questions and Part B has one problem question. The completed assignment should not exceed 1,000 words.
This is a risk “trigger task”. Although it counts for 10 percent of your total assessment in the subject, it more importantly allows us to ascertain that you are engaging in the subject. However, please note that although the task only contains ten multiple choice question and one problem question, the response to that question should be presented in the same manner as you will be expected to present responses to all questions in all assessment tasks in this subject. Your response must be divided into 4 parts. Each part is detailed in the guide to marking criteria given below.
Part A (ten multiple choice questions worth 5 marks). Part B one problem question (worth 20 marks) based on Text material. Text material which may be relevant to this question may be drawn primarily from any of Text chapters 1 or 2. The question addresses the following learning outcomes:
• 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 apply demand and supply analysis to make a range of market related decisions
Answer the following:

PART A There are ten (10) multiple choice questions.

Q1 Economics is the study of
A)the share market and its effect on consumers and businesses
B)money and how it is used by society
C)unlimited wants and limited resources
D)unlimited resources and limited wants

Q2 Which of the following does not illustrate opportunity cost?
A)If I study I must give up my sport and hobbies.
B)If I purchase a new computer I must give up spoiling myself with “goodies”.
C)the more I spend now the more I will be likely to spend in the future.
D)If I spend more on my car the less I will have to spend on other luxuries.

Q3 The opportunity cost of going to university is
A)the money spent at university including all fees
B)the benefit gained from having a university degree
C)dollar value of all alternatives
D)the next best alternative of the money spent

Q4 An economic model indicates that a rise in income will result in consumers purchasing fewer fast food meals, ceteris paribus. “Ceteris paribus” means
A)other relevant factors like consumer incomes must be held constant
B)consumers need for food remains the same regardless of price
C)the theory is widely accepted but cannot be accurately tested
D)food prices must first be adjusted for inflation

Q5 If the price of meat pies increases, “ceteris paribus” (other things being equal), demand for tomato sauce will:
A)not change, only the quantity demanded changes
B)increase because the goods are substitutes
C)decrease because the goods are substitutes
D)decrease because the goods are complements
E)increase because the goods are complements

Q6 Assume that petrol and cars are complementary goods. What would be the effect on the car market of a decrease in the price of petrol, “ceteris paribus”:
A)decrease in the quantity of cars demanded
B)decrease in demand for cars
C)increase in the quantity of cars demanded
D)increase in demand for cars

Q7 On a Production Possibilities Frontier a change from economic inefficiency to economic efficiency is shown by
A)a movement along the frontier
a B)movement from a point within the frontier to a point outside the frontier
C)a movement from a point within the frontier to a point on the frontier
D)a change in the slope of the frontier

Q8 A nation is able to increase its economic growth by
A)reducing the number of skilled migrants into the country
B)adding to its stock of capital
C)reducing its expenditure on research and development when in a budget deficit
D)imposing tariffs and quotas on imported goods

Q9 The demand curve for cinema tickets shifts to the right. This would be caused by
A)a fall in price of cinema tickets
B)an increase in the price of DVD’s
C)a fall in consumer income
D)a rise in price of cinema tickets

Q10 Coca Cola and Pepsi are substitute goods. If the price of Coca Cola increases, we would expect that
A)the demand for Coca Cola would decrease
B)there would be an upward movement along the demand curve for Pepsi
C)the demand curve for Pepsi would shift to the right
D)the demand curve for Pepsi would shift to the left

PART B (20 marks) Problem question.

This summer appears to be another scorcher. Coca Cola and all the major drink companies are banking for record sales of fizzy drinks. During the past decade the government have pressed for healthy eating and drinking habits as unhealthy Australian culture is costing the government an enormous amount of funding for health care. The government is consistently trying to raise awareness of the sugar content of some of the fizzy drinks via multiple advertising. It appears that that this might have had an effect after all. Coca Cola has reported that sales have been slowly dropping over the years for its fizzy drinks and upon closer look there are now many smaller businesses selling healthy drinks all around the major cities such as Boost Juice. Using the concepts of demand and supply  (chapter 1, 2, 3) analyse the change in the trend of healthy drinking for fizzy & healthy drinks.