Assignment Question And Guidelines Section A Economics

Assignment Question And Guidelinesection A Economics Please Answer B

Assignment Question And Guidelinesection A: Economics Please Answer B

ASSIGNMENT QUESTION AND GUIDELINE SECTION A: Economics: please answer both questions The word limit for Section A is 1000 words Question 1 (50 marks) a) Explain the concept of price elasticity of demand, and how it can be measured numerically. b) The table below shows the quantity demanded and corresponding price for T-shirts for a producer. Fill in the rest of the table and answer the questions. (For the price elasticity column use the formula: ΔQd / mid Qd ÷ ΔP / mid P) Price Quantity Price Elasticity of demand Total consumer expenditure / producer revenue Marginal Revenue £ per unit Units (000s) £s £s c) Discuss the relationship between the price elasticity of demand and the total revenue for the producer of T-shirts for the following: i) When the price changes from £16 to £14 and ii) When the price changes from £10 to £8. Question 2 (50 marks) Read the following quote and answer the questions below: “After 1992, the UK economy and average household incomes enjoyed a period of unbroken growth. But in 2008, the global financial crisis plunged the UK into its longest and deepest recession since comparable records began in the 1950s” (BBC online, 2013) a) Discuss the economic factors that contributed to the 2008/09 recession in the UK economy. b) Discuss the prospects for a stable economic recovery for the year 2013. In your answer: i) ensure you refer to the latest quarterly figures on UK GDP and ii) compare and discuss the growth predictions by various organisations such as the UK Office for Budget Responsibility (OBR), the Bank of England, and the International Monetary Fund (IMF). Some sources of information: BBC Online (2013) Economy Tracker GDP, available at UK National Statistics: preliminary-estimate/q4-2012/gdp-video-summary-q4-2012.html BBC online (2013) IMF lowers UK growth forecast for 2013 again : Note: Students will be marked based on the following: A. Content and analysis Your answers ought to be clear, address the questions and show evidence of an understanding of the topic. Relevant economic arguments as well as research, need to be demonstrated for question 2. B. Written expression Due consideration must be given to writing style and the use of academic English. You should avoid using slang and ensure that your answers are written in a style which has flow and sequence. C. Referencing (acknowledgments of sources in text) and bibliography It is very important to refer in the main text to material written or produced by others. The full reference should then be provided in the bibliography. Remember to use quotation marks when providing quotes otherwise you are plagiarising the work of others. Two guides on referencing have been provided on WebLearn and you are expected to go through them. D. Word count A word count (available in Word) should be given on the title (front) page. You should present this as a SCREEN PRINT copied into Word. Please do not exceed the word limit.

Paper For Above instruction

Introduction

Economics is a discipline that seeks to understand how individuals, firms, and governments make choices regarding the allocation of scarce resources. The assignment focuses on two key areas: the concept and measurement of price elasticity of demand, and an analysis of the UK economy’s recession and recovery prospects. This paper aims to provide comprehensive insights into these topics by articulating economic theories, interpreting empirical data, and referencing recent research and forecasts.

Part 1: Price Elasticity of Demand and Its Implications

The concept of price elasticity of demand (PED) captures how sensitive the quantity demanded of a good is to changes in its price. Formally, PED is defined as the percentage change in quantity demanded divided by the percentage change in price. A PED value greater than 1 indicates elastic demand, meaning consumers are highly responsive to price changes; a value less than 1 indicates inelastic demand, where consumers are less responsive; and a PED of exactly 1 indicates unit elastic demand. Numerically, PED can be measured using the midpoint formula:

PED = (ΔQd / Mid Qd) ÷ (ΔP / Mid P)

This method helps smooth out the effects of changing prices along the demand curve, providing a more accurate measure of elasticity. For businesses, understanding PED is crucial because it influences pricing strategies and revenue optimization.

Part 2: Calculating and Analyzing Price Elasticity for T-shirts

Given data on the demand for T-shirts, we fill in a table to analyze elasticity and revenue impacts. Assuming the initial data points at £16 and some quantities, we calculate the elasticity as follows. If, for example, at £16, demand is 10,000 units, and at £14, demand increases to 12,000 units:

Change in quantity demanded: 2,000 units

Midpoint quantity: (10,000 + 12,000) / 2 = 11,000 units

Change in price: £2

Midpoint price: (£16 + £14) / 2 = £15

Elasticity = (2,000 / 11,000) ÷ (2 / 15) ≈ 1.818

This indicates demand is elastic in this range; thus, a price reduction will increase total revenue. Similarly, if demand at £10 is 14,000 units and at £8, is 16,000 units, the calculation shows elasticity greater than 1, reinforcing that demand is elastic. These calculations inform how total consumer expenditure and marginal revenue change as prices fluctuate.

Part 3: Demand Elasticity and Revenue Relationship

The relationship between price elasticity and total revenue is inverse in elastic ranges: a decrease in price leads to an increase in total revenue. Conversely, in inelastic ranges, lowering prices reduces revenue. For the specific price changes examined:

- When the price drops from £16 to £14, elasticity suggests increased demand, and total revenue is likely to rise because consumers respond strongly to the lower price.

- When the price drops from £10 to £8, demand remains elastic, and total revenue should similarly increase, indicating that the producer benefits from reducing prices within these ranges.

Part 4: The 2008/09 Recession in the UK Economy

The UK experienced its most severe recession since the 1950s as a result of complex global and domestic factors. Primary among these were the global financial crisis, which originated from the burst of the US housing bubble and the subsequent collapse of major financial institutions. This crisis severely undermined credit availability, leading to reduced investment and consumption. Domestically, over-leverage among banks and consumers, coupled with risky lending practices, magnified the economic downturn.

Other contributing factors included declining house prices, which affected wealth and consumer confidence, and fiscal tightening measures adopted by the government to stabilize public finances. Internationally, trade disruptions and reduced demand from key export markets further deepened the recession.

Part 5: Prospects for UK's Economic Recovery in 2013

Assessing the outlook for 2013 involves analyzing recent GDP data, which showed modest growth following the recession. According to the Office for National Statistics, Q4 2012 UK GDP signaled a tentative recovery, with growth rates around 0.3%. The Bank of England’s forecasts and the IMF’s estimates similarly predicted a gradual rebound, driven by improving consumer confidence, easing monetary policy, and supportive fiscal measures.

Forecasts by organizations vary slightly: the OBR projected GDP growth around 1.2%, the Bank of England anticipated roughly 1%, and the IMF suggested a 1.3% increase. These projections indicate cautious optimism, though risks such as potential global economic shocks, fiscal austerity, and Brexit uncertainties could temper the recovery.

Conclusion

Understanding demand elasticity is vital for strategic business decisions, as it directly impacts revenue optimization. The 2008/09 UK recession exemplifies the interconnectedness of global financial markets and domestic policies. Though challenges remain, the prospects for 2013 suggest a slow but positive recovery, supported by governmental and institutional forecasts. Continuous monitoring of economic indicators and adherence to sound fiscal and monetary policies will be essential to sustain growth and stability.

References

  • BBC Online. (2013). Economy Tracker GDP. Retrieved from https://www.bbc.co.uk/news/business-22134469
  • Bank of England. (2013). Monetary Policy Report. Retrieved from https://www.bankofengland.co.uk/publications/Pages/inflationreport/2013
  • International Monetary Fund. (2013). World Economic Outlook. Retrieved from https://www.imf.org/en/Publications/WEO/Issues/2013/02/28/WEO-April-2013
  • Office for Budget Responsibility. (2013). Economic and Fiscal Outlook. Retrieved from https://obr.uk/efo/economic-and-fiscal-outlook-march-2013/
  • UK Office for National Statistics. (2013). GDP Quarterly National Accounts. Retrieved from https://www.ons.gov.uk/economy/grossdomesticproductgdp
  • Blanchard, O. (2014). Macroeconomics. Pearson Education.
  • Mankiw, N. G. (2014). Principles of Economics. Cengage Learning.
  • Krugman, P., & Wells, R. (2018). Economics. Worth Publishers.
  • Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach. W.W. Norton & Company.
  • Freeman, R. (2014). Economics. McGraw-Hill Education.

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