Economics

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ASSESSMENT Details and all of the information

APPLIED WRITING Weighting: 25% Requirement: Answer the questions relating to a newspaper article Word limit: 1250 words
Provide adequate referencing. Failure to cite properly is evidence of academic misconduct and will result in marks being deducted.
There will be no re-submission of the assignment. If you require an extension you will need to make an application for an extension to the unit coordinators by clicking the ‘Extensions’ link under the ‘Unit essentials’ section of the course site.
Late assignments that do not have approved extensions will incur a penalty. In accordance with the Division of Business guidelines, assignments submitted late without permission from the course coordinator/s will attract a penalty of 10% of the total possible marks for the assignment per day for each day late, or part thereof, after the due date. Assignments more than seven days late without an approved extension will not be marked.

You will receive a suggested answer guide two weeks after the due date and a feedback sheet. Normal Harvard referencing conventions apply. Penalties will be applied for incorrect referencing. See: http://guides.library.unisa.edu.au/c.php?g=169977&p=1118872
Provide adequate referencing. Failure to cite properly is evidence of academic misconduct and will result in marks being deducted.
SUBMISSION AND RETURN OF ASSESSMENT PIECES
When preparing an assignment, please do the following:
• Number the pages of your assignment.
• Include the word limit on the bottom of the first page.

 

 

MICRO Economics

 

 

 

The Article
Butter shortage to drive up price of baked goods over Christmas
6:28am Oct 26, 2017
A nationwide butter shortage is pushing up the prices of cakes, pies and biscuits and it’s expected to get worse before the Christmas rush.
Consumers are being warned of a Christmas season filled with pricey baked goods as Australian butter prices skyrocket more than 140 percent in 18 months, the Daily Telegraphreports.
The shortage is being blamed on a number of factors, including changing trends, such as more consumers choosing full cream milk rather than skim.
In the last year, consumers have also trended towards buying butter rather than margarine, stripping the supply even further.
And to make things worse, milk production dropped seven percent last year.
The butter shortage will leave Australians forking out extra cash for baked goods. Prices for butter have skyrocketed up to 140 percent in the last 18 months.
President of the National Bakery Industry Association, Brett Noy, said bakeries have been forced to switch to French butter because the cost in Australia is just too high.
“Over a year ago a 25kg box of Australian butter was $100, now it hits $240. We don’t want to see a shift away from support of local dairy farmers but we are trying the best we can to keep prices down at the till,” Mr Noy told the Telegraph.
Some bakers are now considering the ‘controversial decision’ to use margarine in their baked goods instead of butter.
“We don’t want this. There will be a big impact on taste and nutritional value,” Mr Noy said.
The butter shortage is expected to continue into 2018.
http://www.9news.com.au/national/2017/10/26/06/18/butter-shortage-across-australiabaked-goods-christmas

Please read the Article ‘Butter shortage to drive up price of baked goods over Christmas published on October 26th 2017 and answer the following questions:
Questions
1 Assuming butter is sold in a purely competitive market; use the supply and demand diagram to describe, ceteris paribus, the major factors contributing to the nationwide butter shortage and its impact on equilibrium price and quantity. In your discussion make sure to explain the process of moving to the new equilibrium output and price. (5 marks)

2 (a) Using the determinants of price elasticity of demand, discuss whether you think the elasticity of demand for butter to be inelastic or elastic? (4 marks)
(b) If the market demand for baked goods is price inelastic explain what will happen to the total consumer expenditure in that market stemming from the butter shortage. Specify any assumptions you make. (6 marks)

3. Use the supply and demand diagram to explain the impact on at least two other markets affected by the butter shortage and where the equilibrium outcomes are different. In your discussion specify your assumptions and explain the equilibrating process in the related market(s) in terms of the new equilibrium output and price and how they differ. (7 marks)

 

Your assignment will also be assessed on how effectively you can communicate with the reader; i.e. how well you have presented your arguments and ensured your analysis is logical and consistent.
Consequently, 3 marks will be awarded for effective writing including proper grammar, referencing and formatting. Importantly, make sure you use appropriate diagrams in your analysis. Please check the FAQs for Assignment 2 if you have further questions on this assignment.

Total marks: 25 marks

 


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