Faculty of Arts, Business, Informatics & Education

ECON20023
Economics for Business

What is this course about? This course encompasses a broad ranging introduction to economic theory and analysis
as well as a study of some applications of economics to economic systems and to
enterprises. Students will be required to study macroeconomics (how an economy
works as a whole) and microeconomics (how individual businesses and sectors operate).
Students will also be required to gain some understanding of why institutions are very
important in an economy, and how internal and international trade creates economic
wealth. Key goals in the course will be to raise your awareness of the importance of
economic systems, introduce you to the different fields of economic theory that are
relevant to business, and develop some analytical skills.

What are the expected On successful completion of this course, you should be able to:
outcomes of the course?
1. understand the nature and scope of the discipline of economics and the
methodology of economic analysis
2. explain the nature of the theory of demand and the theory of supply, and
demonstrate how prices of goods and services and the factors of production are
determined
3. critically compare and contrast the characteristics of four different market
structures: perfect competition, monopoly, monopolistic competition and
oligopoly, and be able to rate each in terms of efficiency in the allocation of
resources
4. demonstrate why government intervention may be necessary in order to achieve
more desirable outcomes than would be yielded by the unfettered operation of
market forces, and to examine particular cases of market failure
5. explain the macroeconomic concepts and demonstrate their application to study
inflation and unemployment
6. develop a simple macro model and analyse fiscal policy and monetary policy
7. critically examine international trade, exchange rates and balance of payments
issues.

When is it offered? 2010 Term Three

For those of you taking the course on campus, the schedule will be published at
http://timetabling.cqu.edu.au

Where is it offered? Brisbane, Flexible Learning, Gold Coast, Melbourne, Melior, Sydney

How is it assessed? Approved assessment for this course is:

Examination 60%
Other 40%
Assessment 1 40% Assignment ALL

What textbooks do I need Prescribed

to obtain? ● Layton, A., Robinson, T. & Tucker,I. (2009). Economics for Today (3rd.).

Melbourne, Victoria, Australia: Cengage Learning.

Course Profile for: ECON20023, 2010 Term Three - Page 1

 Who do I contact?
Coordinator: Liz Sidiropoulos
Email: econ20023-admin@cqu.edu.au
Phone: +61 3 8662 0577

Additional contact details may be found at:

http://lecturer.cqu.edu.au/lecturer.jsp?term=2103&course=ECON20023

Copyright CQUniversity

Information for Students for this Offering

Study Schedule
Week Begin Date Module/Topic Chapter Events and
submissions

Week 1 01 Nov 10 Introduction to economic way of thinking 1&2

Week 2 08 Nov 10 Basics of market mechanisms: demand and supply 3&4

analysis

Week 3 15 Nov 10 Elasticity of demand and supply and Production 5 & 6

costs

Week 4 22 Nov 10 Perfect competition 7

Week 5 29 Nov 10 Monopoly 8

Week 6 13 Dec 10 Monopolistic competition and oligopoly 9

Week 7 20 Dec 10 Labour market and microeconomic reforms 10

Assessment item 1
All Students
Assignment
Due: 22 Dec 10

Week 8 04 Jan 11 Macroeconomicfundamentals: GDP and business 11 & 12

cycles

Week 9 10 Jan 11 Inflation and unemployment. A simple model of 13 & 14

macro economy

Week 10 17 Jan 11 Monetary and fiscal systems 15

Week 11 24 Jan 11 International trade and finance 18

Week 12 31 Jan 11 Review Week

Course Profile for: ECON20023, 2010 Term Three - Page 2

Course Profile for: ECON20023, 2010 Term Three - Page 3
Assessment Submission
Hard Copy (when required)
Off-campus students
● Submit hard copy, signed assignments to the Student Contact Centre, Building 5, CQUniversity, Rockhampton
QLD 4702.
● Access CQUcentral to print a personalised Assessment Cover Sheet for each assignment submission. Instructions

for generating your coversheet are at: http://dtls.cqu.edu.au/FCWViewer/getFile.do?id=23407

On-campus students
Submit hard-copy, signed assignments to Assignment Boxes located on your particular Campus - if none are available
then submit to the Administration Office.
● Central Queensland Campus Students should access CQUcentral to print a personalised Assessment Cover Sheet
for each assignment submission. Instructions for generating your coversheet are via the link above.
● Australian International Campus Students should access the personalised coversheet available at your Campus.

Electronic Delivery (when required)

All assignments submitted electronically must be through the Student Portal http://mycqu.cqu.edu.au/portal/dt
As submission methods may vary from the above please check details on your course website or with your course
coordinator if in doubt.
POLICIES AND PROCEDURES FOR ASSESSMENT
Students must familiarise themselves with the following policies and procedures:
Assessment and examination policy and procedures - http://policy.cqu.edu.au/Policy/policy_file.do?policyid=701
Assignment preparation and presentation Guide for Students -
http://content.cqu.edu.au/FCWViewer/getFile.do?id=26491
Presentation - http://fbi.cqu.edu.au/FCWViewer/getFile.do?id=17724
Referencing style
The Faculty of Arts, Business, Informatics & Education generally uses the Harvard (Author/date) style of referencing
except for education, history and law courses. More information on the styles used by various schools can be found at
http://facultysite.cqu.edu.au/FCWViewer/view.do?page=3955
For LAWS courses http://www.lib.unimelb.edu.au/cite/law/index.html
Applying for extensions - http://content.cqu.edu.au/FCWViewer/view.do?site=534
Assignment grading - http://policy.cqu.edu.au/Policy/policy_file.do?policyid=437
What is plagiarism? - http://facultysite.cqu.edu.au/FCWViewer/view.do?page=3952
General student information (CQUcentral) - http://navigatecquni.cqu.edu.au/FCWViewer/getFile.do?id=26605

Course Profile for: ECON20023, 2010 Term Three - Page 4

Faculty Guide
Guide for Students http://content.cqu.edu.au/FCWViewer/view.do?page=9177

OTHER IMPORTANT DATES

Examinations:
Standard Examinations 7 - 11 February 2011
Deferred/Supplementary Examinations 4 - 8 April, 2011
Note: A recess is held during term. Please consult the CQU handbook for specific dates and other information at:
http://handbook.cqu.edu.au
Contacting Teaching Staff
During the course, students should initially contact their local teaching staff to answer any queries related to the course
that they may have. Contact details for local teaching staff can be found on the course website. If local teaching staff
cannot fully answer the query or it is of a personal nature, students can contact the Course Coordinator.
Student Contact
A directory of assistance containing information for both on-campus and off-campus students will be provided on the
web, before term starts, at: http://content.cqu.edu.au/FCWViewer/view.do?site=534
The university allocates every student an individual email address, the format of which is student
number@student.cqu.edu.au (e.g. S00011123@student.cqu.edu.au). This is the official email address that the
university will use for all email correspondence. Student emails can be accessed through http://webmail.cqu.edu.au or
http://mycqu.cqu.edu.au. Students are expected to check their official email address on a frequent and consistent basis
(at least once weekly). Students are encouraged to review the new university policy relating to email communication at
http://policy.cqu.edu.au/Policy/policy.jsp?policyid=642 which has been introduced to ensure all course and program
updates are received.

Course Profile for: ECON20023, 2010 Term Three - Page 5

Course information
Student use of the course website is mandatory. This is provided using the Learning Management
System (LMS) which can be accessed through the MyCQU Student Portal:
http://mycqu.cqu.edu.au/portal/dt. This course uses Moodle LMS. If you have difficulty logging in,
please contact Helpdesk on (07) 4930 9233.
Regular student access to email is required for this course.
Regular student access to the Internet is required for this course.
You must have access to the following computer resources – Delete this section if there are no
computer requirements.
Students are expected to follow a self-directed study schedule which meets the required
deadlines.

Assessment
Continuous assessment / examination
For students to receive a passing grade in this course they must complete all items of assessment and
receive 50% (or greater) of the total marks for this course. It is not required that a student achieve
50% or greater on each item of assessment.

Assignment submission
Off-campus students should submit hard copy, signed assignments to the Student Contact Centre,
Building 5, CQUniversity, Rockhampton, QLD 4702.
On-campus students should submit hard-copy, signed assignments to assignment boxes located on
your particular campus – if none is available then submit to the Administration Office.
Central Queensland Campus students should access CQUcentral to print a personalised assessment
coversheet for each assignment submission. Instructions for generating your coversheet are at:
http://dtls.cqu.edu.au/FCWViewer/getFile.do?id=23407.
Australian International Campus students should access the personalised coversheet available at
your Campus.

Course Profile for: ECON20023, 2010 Term Three - Page 6

Assessment details for ALL students
Assessment item 1 — Assignment
Due date: Wednesday of Week 7 ASSESSMENT
Weighting: 40%
Question 1 – 22 marks
Question 2 – 22 marks
Question 3 – 44 marks
An additional 12 marks are allocated for overall research
(see assessment criteria below).
Marks out of 100 will be scaled back to 40%.
Length: 500 words each for questions 1 and 2;
3,000 words for question 3. 1
Objectives
This assessment item relates to the course learning outcomes 1, 2 and 3 as listed in Part A.

Question 1 (22 marks)

(a) Draw a production possibility frontier to illustrate society’s trade-off between government
spending on a new national telecommunications network and the construction of new schools.
What factors would determine the shape and position of the frontier? Show what happens to the
PPF if engineers develop improved communications technology. (3 marks)

(b) The market for pizzas has the following schedules in the table below.
Price Quantity
($) Demanded Quantity Supplied
6 135 26
7 104 53
8 81 81
9 68 98
10 53 110
11 39 121

i) Draw a diagram. What is the equilibrium price and quantity in this market? (1 mark)

ii) Suppose the government imposes a binding price floor in the market of $10. What is
the quantity of pizzas offered by suppliers and the quantity actually sold? Is there a
surplus or shortage in the market? If the government removed the price regulation,
explain what would drive the market back towards equilibrium. (2 marks)

Course Profile for: ECON20023, 2010 Term Three - Page 7

 iii) Assume that the costs of supply for pizzas fall at every level of production by $2/unit
because of a fall in raw material prices. Explain how the market will adjust from the
previous equilibrium. What happens if input prices return to normal? (2 marks)

iv) Suppose there is an increase in the number of buyers by 10%. Draw a diagram and
explain the effect of such a change on the market price and quantity from the initial
equilibrium position. Suggest possible reasons for such an increase in buyers.
(2 marks)
(c) Utilise the demand-supply market models (for each market below) to graphically illustrate
and explain the following scenarios (in the short run). Identify for each scenario what the
effects are likely to be on equilibrium price and quantity. State your assumptions.
i) The market for cream cheese if there is a fall in the price of milk. (3 marks)
ii) The market for solar PV panels if there is an increase in electricity charges. (3 marks)
iii) The market for cars if there is an increase in the costs of making steel. (3 marks)
iv) The market for child minding services if there is a rise in population growth.
(3 marks)

Question 2 (22 marks)

(a) Suppose you are working for a cheese company and are considering an advertising campaign to
publicise new research findings that eating cheese has no negative health consequences. The new
evidence dispels earlier perceptions that dairy products have high cholesterol content.
i) If you are the only cheese producer for the market, what effect would this advertising
campaign have on demand for your products? Would you undertake this campaign, if
it were quite expensive? Why? (2 marks)
ii) If you are one of 100 cheese producers in this market, what effect would this
advertising campaign have on demand for your products? Would you undertake the
campaign if it were expensive? Compare your answer to (a). (2 marks)
(b) The table below shows the weekly labour and output schedules for a firm producing jeans in Australia.
Assume that the cost of labour is $450 per worker (weekly wage), overhead costs are $500 per week and
jeans sell for $150 per unit.
Quantity Units of Total Variable Average Average Marginal Total Marginal Profit/
labour Cost Cost Cost Fixed Cost Revenue Revenue Loss
required ($) ($) ($) Cost ($) ($) ($) ($)
($)
1 1
3 2
6 3
10 4
15 5
21 6
26 7
30 8
32 9
33 10

Course Profile for: ECON20023, 2010 Term Three - Page 8

 i) Fill in the blank columns on the table. (2 marks)
ii) Draw the AC, AFC, AVC, MC curves for this producer and comment on the shape of
these curves. (2 marks)
iii) Identify the production level where profit is maximised using two different rules.
Illustrate the profit maximising level on your diagram from part (ii). (3 marks)
iv) Repeat the analysis to find revenue and profit if the price per unit is $200. What is the
maximum profit at this level of output? Illustrate the profit maximising level on your
diagram from part ii). (3 marks)

(c) Assume the jeans manufacturer is now the only producer in the industry with similar costs.
Quantity Units of Average Variable Tota Margina Price Total Margina Profit /
labour Cost Cost l l Cost per unit Revenue l Loss
required Cost Revenue
($) ($) ($) ($) ($) ($)
($) ($)
1 1 350
3 2 330
6 3 300
10 4 260
15 5 220
21 6 180
26 7 150
30 8 128
32 9 118
33 10 113

i) Complete the table. (2 marks)

ii) Using the numbers from the table above, select the appropriate curve and draw a
diagram showing how the monopolist makes a decision regarding production levels.
(2 marks)

iii) Identify the level of output and price under the monopoly market structure. (2 marks)

iv) Explain the level of resource misallocation comparing the outcome under the monopoly
situation with the earlier outcome under perfect competition (at a price of $150 per
unit)
(2 marks)

Course Profile for: ECON20023, 2010 Term Three - Page 9

 Question 3 (44 marks)
(a)

(i) Explain the four main types of market structure, and identify the key factors that
distinguish them. (5 marks)

(ii) Explain why a monopoly can lead to inefficient outcomes and explain the deadweight
loss of monopoly. Explain why competition leads to better outcomes than monopoly at
a theoretical level. (5 marks)

(iii) Explain what a natural monopoly is and compare it to a normal monopoly. (4 marks)

(iv) Identify options available to the government to address monopoly issues. (4 marks)

(v) Choose a case study from your home country that can illustrate a monopoly situation.
Describe what potential exists for deadweight losses. What actions has the government
taken to minimise these losses? What alternative strategies would you suggest?
(8 marks)

(b)
(i) Choose a case study from your home country where a positive externality currently exists
in the market. Illustrate the situation and the resulting deadweight loss in a diagram and
discuss ways that your government has addressed the presence of positive externalities in
the market. (10 marks)
(ii) Suggest other options for dealing with positive externalities in your case studies (relate this
back to your answer in part (i)). (8 marks)

Assessment criteria
 Besides the textbook, you should also refer to a few other books, journal articles and relevant
websites in answering these questions.
 Sources must be acknowledged and a list of references provided.
 Concepts must be defined accurately and completely.
 The assumptions upon which the analysis is based must be stated at the onset.
 Diagrams must be drawn properly, correctly labelled and the relations they depict explained.
 Photocopied and scanned graphs are not acceptable. It is preferable to create a graph on a
computer or to hand-draw a graph than to copy one.
 Answers must be complete, addressing the specific tasks nominated in the questions.
 Where a question has more than one part, so too should the answers. Ensure complete
coverage.
 You must work on the assignment questions progressively each week – which will prevent you
from asking for extensions.
 Remember an extension is not a gift, it is a burden.

Course Profile for: ECON20023, 2010 Term Three - Page 10

Examination
Due date: During examination period at the end of term
Weighting: 60%

Length: Duration 3 hours

Examination conditions
 This examination is closed book. Closed-book means you are not permitted to take any materials
into the examination room with you unless specified.
 You may take a non-electronic, concise, direct translation dictionary into the examination room in
accordance with CQU policy. The dictionary must not contain any notes or comments.
 You may take a non-programmable, non-text-retrievable silent-only calculator into the
examination room in accordance with CQU policy.

View the University’s policy on examination in the Assessment of Coursework Policy at:
http://policy.cqu.edu.au

View important examination information at:

http://handbook.cqu.edu.au/Handbook/information.jsp?id=126

The examination timetables will be made available later in the term. View the examination timetable
at:
http://www.cqu.edu.au/studinfo/admin/timetabling/index.htm

Further information on the examination will be available on your course website later in the term and
within your revision lecture.
NOTE: The examination information provided in this Course Profile also relates to Deferred
and Supplementary Examinations. No separate advice will be provided in the case of a
deferred/supplementary exam.

Course Profile for: ECON20023, 2010 Term Three - Page 11