BLAW1002 S2 2020 – Economic Exercises (EEs) [worth 30%] Assessment Brief and Marking Guidance for Students
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1. Timeline of Economic Exercises (EEs) – worth 30%
? Assessment brief available on Blackboard (Bb): Wednesday 23rd September 2020, 1pm.
o All times specified in this brief are in Perth, AWST.
o Students have up to 23 days to work on EEs.
? Live and recorded Q&A sessions on EEs via Bb Collaborate with Andrew Brennan:
o Wednesday 30th September 2020, 1pm to 2:30pm (in tuition free week). o Friday 9th October 2020, 9am to 10:30am (i.e. in the specified online lecture time on M7). o Friday 16th October 2020, 9am to 10:30am (i.e. in the specified online lecture time on M8).
? General clarifications (if needed) on EEs with Morgane Johns via the Ed Forum
(https://edstem.org):
o Monday 28th September to Friday 2nd October.
o Monday 5th to Friday 9th October.
o Monday 12th to Friday 16th October.
? Morgane Johns will endeavour to answer inquires on Ed within 12 hours during the weekdays as stated above. Brennan may chip in on Ed as well (when needed).
? Participation in the Bb Collab sessions and on the Ed Forum is entirely optional.
? Due date/time of EEs: submit an editable Word Document (or PDF) to Turnitin by Friday 16th October, 1pm.
o No need for a particular cover page, just include the questions and your answers and the following:
? When submitting your work, include your student name, student ID, tutor’s name and the tutorial class time and day in the editable Word Document (or PDF). N.B. the file size for uploading to Turnitin cannot exceed 20MB.
2. Content
Assessment overview:
The EEs consist of one section with two (2) compulsory short written answers.
There are two (2) main questions with various parts to be answered using well-labelled, hand-drawn diagrams, with accuracy and sufficient explanations.
The answers must refer to key economic concepts taught in the relevant BALW1002 S2 2020 economic modules E2 (M7) and E3 (M8), where relevant.
The key economic concepts are taken from CORE ESPP, and are discussed in lectures and tutorials:
• Economics Module E2 (BLAW1002 M7) – Firms and Markets for Goods and Services CORE ESSP Readings, selected sections of Unit 7: Introduction to 7.12, 7.14. https://www.core-econ.org/espp/book/text/07.html
• Economics Module E3 (BLAW1002 M8) – Market Successes and Failures CORE ESSP Readings, selected sections of Unit 11: Introduction to 11.14.
https://www.core-econ.org/espp/book/text/11.html
In EEs, the main emphasis is on E2 and E3. EEs is mostly a written analysis using prose. There is a graphical component to this assessment where you are to simply hand-draw (pen, paper, and then scan) the particulars of the relevant economics diagram. These answers need to be typed, but diagrams must be hand-drawn and scanned into the Word document.
3. Overview of Marks
How marks are allocated:
Students will be marked on the extent to which they specifically answer the question and provide clear, logical, well-reasoned and sufficient explanations. In general, the greater the attention to detail in explanation given with logical consistency, solid reasoning, and clarity, the higher the mark (distinction grade). In this assessment, the quantity and quality of the explanation matters. There are no specific word limits per se, so long as what is written contributes to and strengthens your analysis. Brief answers given with less attention to detail but assuming you get most of the raw basics correct should earn you a satisfactory (pass or low credit grade) overall. Half-marks are awarded in this assessment. Here is a suitable rubric to give you a rough guide as to how the assessment piece shall be marked:
Criteria
Unsatisfactory
0 – 49%
Satisfactory
50 – 64%
Sound
65 – 79%
Exemplary
80 – 100%
Conceptual Understanding:
Application of Economic Theory Limited understanding and application of key economic concepts/ theoretical framework in response to the case questions. Satisfactory understanding and application of key economic concepts/ theoretical framework in response to the case questions. Sound understanding and application of key economic concepts/ theoretical framework in response to the case questions. Discriminating understanding and application of key economic concepts/ theoretical framework in response to the case questions.
Graphical
Communication and Technical
Details
Diagrams are not used, or the incorrect diagram is used that is not specifically taught in the lectures and/or CORE ESPP. Basic diagrams are constructed to illustrate the theory in more generic terms. Diagrams are welllabelled, drawn with accuracy and adapted to the case question. Diagrams are welllabelled, drawn with excellent accuracy, adapted to the case question and with technical rigour.
Critical Thinking /
Analysis
Reasons are illogical, irrelevant, or vague and/or not informed by research evidence from the relevant articles. Small use of available information in the key news articles. Reasoning is relevant and informed by some analysis and synthesis of research evidence from the relevant articles. Some use of available information in the key news articles. Logical and clear informed by analysis and synthesis of research evidence from the relevant articles. Good use of available information in the key news articles. Discerning and comprehensive informed by robust analysis and synthesis of research evidence from the relevant articles and beyond. Solid use of available information in the key news articles.
A rough guide to the mark awarded out of 30 for the assignment as a whole:
30–49% (F): An assignment that is very brief with (perhaps incorrect) diagrams and mostly unexplained. Poorly constructed sentences and incorrect grammar, punctuation and spelling interfere with conveying meaning to readers.
50–59% (P): Some applications of the theory, yet being a bit unclear at times. Several errors in the diagrams, nonetheless, gets the basics done. Possible weakness in English and sentence structure, not much linkage to the main articles.
60–69% (C): Overall, applications of theory to the diagrams are done well and/or explanation of diagrams are interesting at times. Evidence of some technical details, yet (perhaps) some points made were a bit inconsistent or not discussed in detail enough (i.e. insufficient depth of coverage).
70–79% (D): A very good assignment, drawing from the information from the relevant news articles and with some additional research, explaining the theory in some detail and evaluating the problem at hand. A couple of details perhaps could have been elaborated on (hence not quite enough to be awarded a high distinction). Overall, a great assignment, has good depth to it and with relevant technical details.
80–90% (HD):
An excellent assignment, quite creative on several occasions, solid theoretical applications, comprehensive, crystal-clear explanations, research excellence, and technical specification.
4. Assessment Task
Q1. Tesla and the Market for Electric Vehicles in the US (E2)
[16 marks]
Electric-car development seems to be way of the future to help achieve zero-emissions vehicles. Tesla is a market leader among the electric vehicle (EV) manufactures. Read the following articles and then answer the questions below:
https://arstechnica.com/cars/2019/12/tesla-stock-just-hit-a-new-record-of-400-heres-one-reason-why/ https://www.theverge.com/2020/1/29/21113987/tesla-q4-2019-earnings-results-profit-revenue-model-3 https://thenextavenue.com/2020/06/10/teslas-model-3-profit-margin-is-35-and-it-can-double/
https://theconversation.com/the-road-to-electric-vehicles-with-lower-sticker-prices-than-gas-cars-battery-costs-explained-137196
Based on the discussion in these articles and economic theory from Module E2,
a) explain the important role of economies of scale on the production of EVs.
[suggestion: 250 words or less]
[2 marks for quality of explanation]
b) draw an appropriate diagram to illustrate and explain in some detail the profitability of Tesla’s Model 3 sedan over the second half of 2019.
[suggestion: 400 words or less]
[4 marks for diagram + 5 marks for quality of explanation]
c) Do a bit of extra research and provide a commentary on Tesla’s ability to accelerate EV profitability and gain more market share (and demand) in the foreseeable future.
[suggestion: 400 words or less]
[5 marks for quality of explanation and research]
Refer to key sentences and ideas from the articles where relevant to support your analysis.
HINT: A key diagram for the question (in part b) is where firm which sets the price to maximise profit, such as Figure 7.9d from CORE ESPP. A good answer discusses all the relevant aspects related to the diagram and links to key bits about Tesla’s situation from the article(s).
Q2. Merchant Ships and Negative External Effects of the Oil Spill in Mauritius (E3) [14 marks]
Consider the market for merchant ships. Read the following key article and the relevant weblinks
contained within: https://theconversation.com/why-decarbonizing-marine-transportation-might-not-be-smooth-sailing-116949
a) Based on the cited readings (links contained within the key article): construct a table and summarise the key benefits and external environmental costs of merchant ships.
[suggestion: 250 words or less]
[2 marks for identifying key benefits and external costs]
b) Based on Module E3, draw a relevant diagram to illustrate and explain the negative production externality of merchant ships. Label your axes and curves carefully and use hypothetical numbers in your diagram. Assume—as CORE ESPP Unit 11 does—that the market is competitive.
[suggestion: 400 words or less]
[3 marks for diagram + 3 marks for quality of explanation]
c) Read the following key articles that talk about the need for sufficient compensation for those parties negatively affected in the Mauritian oil spill:
https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2453
Mauritius oil spill compensation could be limited by maritime law technicality
Assume for simplicity that the main third party affected is the tourism industry in Mauritius. Building on the key diagram you developed in part (b) above, illustrate and critically evaluate the government policy of compensation to help solve the market failure in this case.
[suggestion: 400 words or less]
[2 marks for diagram + 4 marks for quality of explanation]
Refer to key sentences and ideas from the articles (and links contained with) where relevant to support your analysis.
HINT: (for part b) key diagram: something akin to Figure 11.7a from CORE ESPP.
5. Expectations (HD exemplar answer from past semester)
A high-quality exemplar of a past student’s work can serve as a useful starting point. Please find herein a high distinction grade answer written by one of our past students from BLAW1002 in S1 2020.
N.B. I have erased the student’s name and other identifying details to ensure privacy – and keep in mind that this assignment has been submitted to the Turnitin system. The exemplar answer provided is to help you get started on your own written analysis.
Comment: So, as you can see the good answer here has explained the main diagram correctly including the suitable government policy to solve the market failure, illustrating a positive external effect. The student has answered the question well using beautiful prose, describing what external effects are, and the diagram is hand-drawn correctly and well-labelled using a bit of actual and hypothetical data. The student achieved this by having done a tiny bit of extra research, which is adequate for this particular question.
PAST Q. MARKET FAILURE – delivery workers in the US (E3)
What are external effects? Consider the importance of US delivery workers in the coronavirus pandemic, according to this article:
https://theconversation.com/striking-amazon-instacart-employees-reveal-how-a-basic-economic-principle-could-derail-our-abilityto-combat-the-coronavirus-135618
Based on this discussion and economic theory, draw an appropriate diagram to illustrate and explain this specific type of externality. Demonstrate on your diagram and discuss what would be a suitable government policy to help solve the market failure in this case.
[Type answer in 400 words or less] [7 marks]
The COVID-19 pandemic has forced people to remain at home and thus demand has risen for home deliveries of necessities (Osofsky 2020), which has led to the development of a positive external effect: a reduced risk of virus spread for society (Osofsky 2020). This is known as an external effect because the actions of the delivery workers have an impact on a third party – society – which is not included in the marginal private benefit (MPB) nor marginal private cost (MPC). However, the delivery workers will themselves face a higher risk of infection as a result.
As can be seen in Figure 3, delivery workers’ wages and thus their MPB are set at P0 – equivalent to $15USD per hour (Hadden 2020) – and the quantity of deliveries is currently Q0, approximately 250 packages per worker per day (Hadden 2020). This means that the delivery market is functioning at point X – for delivery firms, this appears to be the Pareto-efficient point, as MPB is equal to MPC: the cost of employing those workers and carrying out other delivery-related processes.
Figure 3 – Market failure on delivery services in the US during the COVID-19 pandemic
However, there is also a hidden marginal external benefit (MEB): the reduced need for close contact between citizens (Osofsky 2020). As a result, the marginal social benefit (MSB) of the delivery industry is higher than its MPB, illustrating a positive external effect. As such, the actual Pareto efficient point of production is point E, where MPC is instead equal to MSB (CORE Team 2019). At this point, the quantity of deliveries supplied is now equal to Q1, but the price paid by consumers remains fixed at P0. The value of this external benefit is equivalent to area AB. While the market is functioning at point X and thus at a non-Pareto-efficient level, there is market failure and underproduction of deliveries.
However, without some sort of compensation to resolve this market failure, delivery employees will not be willing to face higher risk resulting from increased deliveries, particularly as they currently lack personal protective equipment (Osofsky 2020). The added costs of increasing production (area A) occur in the form of increased labour costs as well as rising PPE costs.
To encourage production at point E, the government could intervene using a subsidy (area AB) – this lump sum, shown in the diagram, could cover the added costs (area A) as well as the remaining value of the external benefit (area B). As such, quantity supplied can expand from Q0 to Q1 without delivery workers being disadvantaged, while consumers benefit from more deliveries and society can benefit from lower interaction. Thus, the market can function at the higher, Pareto-efficient point where MPC is equal to MSB, and thus delivery workers have been compensated for the external benefit they provide – all parties should benefit from the subsidy. However, in practice this depends on which party is paying the taxes to fund the subsidy in the first place.
References:
CORE Team (2019), Economy, Society, and Public Policy, Oxford, UK (500 pages, Oxford University
Press, softcover, ISBN 978-0-19884-984-1, available: https://www.core-econ.org/espp
Hadden, Joey (2020), “Amazon delivery drivers share what it’s like to be on the front lines of the coronavirus pandemic, including not having time to wash their hands and uncleaned vans.”
Business Insider Australia, available: https://www.businessinsider.in/slideshows/miscellaneous/amazon-delivery-driversshare-what-its-like-to-be-on-the-front-lines-of-the-coronavirus-pandemic-including-not-having-time-to-wash-their-hands-anduncleaned-vans/slidelist/74921693.cms#slideid=74921706
Osofsky, Leigh (2020), “Striking Amazon, Instacart employees reveal how a basic economic principle could derail our ability to combat the coronavirus.” The Conversation, available:
https://theconversation.com/striking-amazon-instacart-employees-reveal-how-a-basic-economicprinciple-could-derail-our-ability-tocombat-the-coronavirus-135618
6. Rationale for EEs
Application of Economic Principles – Exercises [worth 30%]
ULO4 explain how business and marketing strategies can create value through application of economic principles.
Rationale for Exercises: to help the student develop and/or strengthen their analytical and communication skills set by applying their knowledge of economic principles to real world issues. Industry values workers with a well-developed set of analytical skills and communicative abilities. Moreover, articulating clear answers and solving (economic) problems are important skills to have in the real business world.
7. FAQs and other notes
? How do I reference the main text?
o The CORE Team (2019): Economy, Society, and Public Policy, Oxford, UK (500 pages),
Oxford University Press, softcover, ISBN 978-0-19884-984-1. https://www.core-econ.org/espp ? For in-text referencing, I would go for something like: CORE ESPP Team (2019).
? How do I reference online news articles?
o See: https://libguides.library.curtin.edu.au/ld.php?content_id=47908597
? More clarification on referencing.
o Overall, the EEs are not a major research activity. The CORE ESPP text (Units 7 and 11) and relevant lecture and tutorial materials (related to E2 and E3) plus references given in this assessment brief are mostly sufficient for you. You are expected in your answers to refer to key economic concepts taught in E2 and E3, where relevant. Just be wise and careful to write in your own words when you draw upon the lecture slides and CORE readings.
? For the diagrams/models, you might want to make a quick reference from the CORE ESPP text and/or lecture materials. You can briefly mention where you got the CORE model/diagram from.
? For parts of the question that require a bit of extra online research, then a bibliography is needed. Include suitable in-text referencing and a bibliography (a reference list) for any additional sources used.
? The similarity report has been disabled for students to view as this may create some unnecessary worry if revealed (i.e. there is bound to be some similar content from the CORE text and the question set etc. among the students).
o As a student, you only need to worry if:
1. you’ve deliberately and strategically plagiarised;
2. and/or sent the EEs on the dark web for someone else to do for you; 3. and/or copied large chunks from your fellow classmates.
Apart from the above, you should fear not and enjoy your originality life index.
? Is the formatting strict?
o Not overly strict. Just do what you need to do re Chicago (you can use Harvard or APA if you prefer) and make sure your fonts and styles and headings etc. are nice and legible, so the marker can clearly see what needs to be seen. It is a good idea to provide a suitable heading for each diagram you draw (as in the case of the exemplar).
? On the question of word limits, the policy for the EEs is something like this: there are no word limits per se – you will not be penalised for going over the word limit per se, so long as what is written is relevant and answers the question.
o The absolute upper word limit for the paper as whole would be say around 2500 words — most students will not need to write that amount.
o The suggested word count is purely a suggestion, students are permitted to write more if they need to. But, as a rough guide, you probably should not go over by more than 100-300 words.
? Aim for a healthy balance between paraphrasing and quotes (but don’t overuse quotes).
? What do you mean by ‘technical details’ (esp. re Q1) and using ‘hypothetical or real values’?
o Where possible, integrate some points of data from the article in question (or with extra research if you wanted to) to make it a little more accurate to convey the concept.
? The reality is you will not be able to with comprehensiveness use actual values for every point on the curves etc. It is just not possible.
o Making up figures (i.e. being hypothetical) is fine and a good practice for all questions. For example, it is hard to get actual quantity figures for the x-axis. To be on the safe side, just state to the reader that you’re using hypothetical values—that way you are informing the reader/maker exactly what you’re are doing.
? For example on Q1, you may find more info in the article on prices and profit to some extent (but not necessarily MC and isoprofit curves per se). Obviously, you won’t have an entire D-curve of prices, but you can draw upon the article to get an approximation.
? If you really wanted to, you could calculate a price elasticity of demand in Q1 part b, based on the hypothetical figures that you have used. It’s not expected as a basic foundation of an answer, but for students who want to work on a high-standard extended answer, then go for it. It also does depend on how the rest of the question is tackled and how you link it to the articles etc.
o You should not need to do an exact copy of a diagram from the unit materials — as this is an applied activity — a diagram may closely resemble something from the materials, but it will not be an exact match.
? What is the marking and grades deadline?
o Please allow for a three (3) week turnaround for marking. The marks and comments should be available on Bb in Grade Center by Friday Nov. 6th 1pm at the latest.
? ? ? The End! ? ? ?
