Bco115 Microeconomics Course Task Brief Rubrics

Bco115 Microeconomics Course Task Brief Rubricstaskthi

This task brief covers for 100% of your final grade in Microeconomics. For Part I of the Course Assessment (40% weight) you need to reflect on the concepts digested, like trade off, scarcity, opportunity costs, elasticity, incentives, welfare, etc. All these applied to demand and supply schedules and curves. For Part II (60%) the main focus will be Theory of the Firm and Markets. I have prepared 2 cases for you to review, interpret and discuss individually for Part I: Case I: Opportunity costs (15 marks) Case II: Price Ceilings: a case in Barcelona (25 marks) Part II (to be delivered by November 1st): Case I: Variable, fixed and marginal costs of your Pizzeria (20 marks) Case II: International Trade for Fashion Apparel (40 marks) 1. a) What is the Opportunity Cost of Going to Business School? Background Signing up for a 4-year bachelor in a Business School has many opportunity costs associated with it. Which of these costs are the highest and how did they impact your decision of whether or not to attend school? Discussion Question Please list the 2 largest opportunity costs of obtaining a 4-year degree (assume studies are full time devotion to get your degree). Now, use 1 of these costs to explain the following trend: When the unemployment rate increases, enrollment in bachelor’s programs also increases, and vice-versa. Support your arguments with schedules and figures. 1. b) Why is it harder to find a taxi in Barcelona’s unsafer neighborhoods? Background Taxi fares are regulated in Barcelona. Taxi drivers are not allowed to charge more than €2,25 for the first kilometer, and €1,18 for each additional km. This regulation translates effectively into a price ceiling on the price of taxi fares. The economic theory tells us that price ceilings tend to reduce social welfare by limiting the number of potential transactions. Discussion Question Do you think there is a relationship between the price ceiling for taxi fares and the fact that it is very difficult to find taxis in high crime neighborhoods? Please use the models and concepts discussed in the course to answer the question. 2. a) When do we stop baking pizzas? Background Pizzas have some variable costs: no cooking, no ingredients. But we probably need an oven and some more equipment which we will have to entertain whether we sell or not pizza... Consider the following cost information for a pizzeria: Quantity Total cost Variable cost 0 dozen pizzas €380,- €0,- 1 €430,- €50,- 2 €470,- €90,- 3 €500,- €120,- 4 €530,- €150,- 5 €570,- €190,- 6 €620,- €240,- • What is the pizzeria’s fixed cost? • Construct a table in which you calculate the marginal cost per dozen pizzas using the information on total cost. Also, calculate the marginal cost per dozen pizzas using the information on variable cost. What is the relationship between these sets of numbers? Comment. 2. b) International competition for apparel. Background Suppose that your country’s textile industry is competitive, and there is no international trade in textiles. In long-run equilibrium, the price per unit of cloth is 30 in local currency. Tasks • Describe the equilibrium using graphs for the entire market and for an individual producer. Now suppose that textile producers in other countries are willing to sell large quantities of cloth in your country for only a price of 25 per unit. • Assuming that your country’s textile producers have large fixed costs, what is the short-run effect of these imports on the quantity produced by an individual producer? What is the short-run effect on profits? Illustrate your answer with a graph. • What is the long-run effect on the number of your country’s firms in the industry? Formalities: • Wordcount: Your answers to the different cases should add up to a total of 1500 words. About less than half for the midterm assignment (Supply and Demand) and slightly over half for the final assignment (Firm & Markets). • Cover, Table of Contents, References and Appendix are excluded of the total wordcount. • Font: Arial 12,5 pts. • Text alignment: Justified. • The in-text References and the Bibliography have to be in Harvard’s citation style. Submissions: • October, 18th • 23:59 CET – Via Moodle (Turnitin) in pdf format for the midterm assignment (Part I) • November, 1st • 23:59 CET – Via Moodle (Turnitin) in pdf format for the final assignment (Part II). Weight: Part I is a 40% of your total grade for this subject and Part II is 60% of your total grade for Microeconomics It assesses the following learning outcomes: 1. Demonstrate an understanding of economic decision-making of different actors. 2. Understand how opportunity costs affect economic behaviour and how Government’s intervention affects welfare and economic actor’s behaviours. 3. Demonstrate an understanding of the Theory of the Firm and how Profit and Loss are affected by fixed and variable costs, marginal costs and revenues. 4. Evaluate real life situations with practical application of the acquired tools and knowledge Rubrics Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69 Knowledge & Understanding (20%) Student demonstrates excellent understanding of key concepts and uses vocabulary in an entirely appropriate manner. Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary. Student understands the task and provides minimum theory and/ or some use of vocabulary. Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary. Application (30%) Student applies fully relevant knowledge from the topics delivered in class. Student applies mostly relevant knowledge from the topics delivered in class. Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident. Student applies little relevant knowledge from the topics delivered in class. Misunderstands are evident. Critical Thinking (30%) Student critically assesses in excellent ways, drawing outstanding conclusions from relevant authors. Student critically assesses in good ways, drawing conclusions from relevant authors and references. Student provides some insights but stays on the surface of the topic. References may not be relevant. Student makes little or none critical thinking insights, does not quote appropriate authors, and does not provide valid sources. Communication (20%) Student communicates their ideas extremely clearly and concisely, respecting word count, grammar and spellcheck Student communicates their ideas clearly and concisely, respecting word count, grammar and spellcheck Student communicates their ideas with some clarity and concision. It may be slightly over or under the wordcount limit. Some misspelling errors may be evident. Student communicates their ideas in a somewhat unclear and unconcise way. Does not reach or does exceed wordcount excessively and misspelling errors are evident.

Paper For Above instruction

Cost-Benefit Analysis of Opportunity Costs in Higher Education

Understanding the concept of opportunity costs is fundamental in analyzing economic decision-making, especially in the context of educational choices such as attending business school. The opportunity cost of going to business school encompasses various foregone benefits, including earnings from immediate employment, work experience, and other personal or financial pursuits.

The two most significant opportunity costs typically associated with obtaining a four-year degree are the lost wages during the period of study and the potential career advancement delays. The forgone income represents a substantial economic sacrifice, as the individual forgoes potential earnings that could have been accumulated during those years. Simultaneously, delaying career progression may impact future income streams and overall lifetime earnings.

Empirical evidence indicates a correlation between unemployment rates and college enrollment figures. When unemployment rises, more individuals opt to stay in school longer, seeking to improve their skills and increase employability, thus increasing enrollment. Conversely, in times of low unemployment, individuals are more inclined to enter the workforce directly, leading to a decrease in enrollment. This trend can be modeled through demand-supply schedules where the increase in unemployment shifts the demand curve for education to the right, as the opportunity cost of staying in school decreases when potential earnings are lower.

Furthermore, the opportunity costs influence economic behavior by affecting individual incentives. During economic downturns, the perceived value of additional education may increase, as the likelihood of securing employment after graduation becomes uncertain. This reinforces the importance of understanding opportunity costs in shaping educational decisions and policies aimed at workforce development.

In Barcelona, taxi fare regulation exemplifies the effects of price controls in a real-world context. By enforcing a price ceiling of €2.25 per km for initial rides and €1.18 thereafter, the city limits the taxi fares, which impacts supply and demand dynamics. According to economic theory, price ceilings typically lead to shortages and reduce social welfare because they prevent the market from clearing efficiently.

In high-crime neighborhoods where the risks for taxi drivers are greater, it becomes more challenging to find taxis, which aligns with the economic model of supply reduction under price ceilings. The regulation discourages drivers from operating in zones where the fare does not compensate for increased risk or costs, leading to a decrease in supply. The scarcity of taxis in these areas results from the combination of the price ceiling and higher operational risks, illustrating how regulations can influence market equilibrium and access to services.

The decision to stop baking pizzas depends on marginal and fixed costs analysis. Considering the provided data, we find the fixed costs by examining the total costs at zero production, which is €380. This includes costs for equipment and setup that remain constant regardless of output. The variable costs for each additional dozen pizzas increase with quantity, reflecting consumables and labor related to production volume.

Calculating marginal costs involves examining the change in total costs for each additional dozen pizzas. For instance, moving from 0 to 1 dozen pizzas increases total cost from €380 to €430, indicating a marginal cost of €50. Similarly, from 1 to 2 dozens, the total cost increases by €40, showing the decreasing marginal cost trend up to a certain point, after which it may stabilize or increase.

The relationship between marginal and variable costs underscores production efficiency. Variable cost per dozen changes with output, and the marginal cost reflects the incremental cost of producing one more unit. When marginal costs exceed the price per pizza, it is economically rational to cease production, as additional production would diminish profit margins.

In the textile industry, international competition influences domestic markets significantly. When imports are willing to sell cloth at a price lower than the domestic equilibrium, it creates a short-term surplus for imported goods, reducing prices for local producers. The graph depicting the market shows the market supply shifting rightward with imports, lowering the overall market price from 30 to 25. This reduces profits for local firms, especially those with large fixed costs, as their average costs may not fall proportionally.

In the short run, individual producers react by decreasing output as the market price falls below their average total costs, leading to reduced profits or losses. In the long run, sustained price declines due to international competition may force less efficient domestic firms to exit the market, decreasing the total number of firms in the industry. This process aligns with perfect competition dynamics, where only the most efficient producers survive, and market entry diminishes when profits are eroded.

References

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