Deakin’s Bachelor of Commerce and MBA are internationally EPAS accredited.
Deakin Business School is accredited by AACSB.
MAE101– Economic Principles
Trimester 2, 2019
Written Assignment
DUE DATE AND TIME: Monday 2 September 2019, 11:45 PM
PERCENTAGE OF FINAL GRADE: 30%
Learning Outcome Details
Unit Learning Outcome (ULO)
Graduate Learning Outcome (GLO)
ULO1: Describe, analyse and apply key microeconomic concepts
GLO1: Discipline-specific knowledge and capabilities
ULO2: Explain, present and interpret economic tools in a digital format
GLO1 and GLO3: Digital literacy
ULO3: Obtain and present information and data related to a real world issue, and critique approaches to the issue.
GLO1, GLO3, GLO4 Critical thinking, and GLO8 Global citizenship.
Assessment Feedback
Students who submit their work by the due date will receive their marks and feedback on CloudDeakin by 23/09/2019, 11:45PM.
Note: Feedback will be given online via comments on the marking rubric and/or on the assignment itself. In addition, solutions will be provided in the assignment folder (in Learning Resources).
Requirements (further details at the end of this document)
o Submit one PDF document, with all content digitally generated (typed, digital diagrams).
o Word limit: 2,000 words (flexible). Please do not restate the question/task; just use the question/task number.
o Academic integrity: do not collude with others. Submit your own work, referencing all sources.
o Students must correctly use the Harvard style of referencing (name – date).
o Proof read for coherence, spelling, and grammar.
o Late submissions (up to 5 days) incur a penalty. Not accepted after 5 days.
o Extensions: only granted in exceptional circumstances which can be documented.
o Start early!!
Page 2 of 10
Brief Instructions
There are two (2) parts to this assignment, parts A and B, with a total of four (4) tasks. You are required to complete all four (4) tasks.
Note the marks allocated towards each task and apportion your responses accordingly. Part A is worth 33 marks. Part B is worth 17 marks. An additional 5 marks are reserved for the quality of presentation, including: the digital presentation of diagrams; all labels and headings on diagrams; proper referencing; assignment submitted as a PDF document; and quality of writing, taking the total to 55 points.
Your score out of 55 points will be converted to a grade out of 30 marks, or 30% of your final result for MAE101.
The word limit for this assignment is 2,000 words.
The due date is Monday, September 2, 2019. Submission is entirely online via the MAE101 Cloud site. Do not hand in a hardcopy. Please note that late submissions will be penalised.
Please make sure that you do your own work. There are heavy penalties for plagiarism.
For detailed instructions, see pages 7 to 10, below.
Page 3 of 10
PART A: INCENTIVES AND UNINTENDED CONSEQUENCES
This part of the assignment consists of two (2) tasks. Task 1 is worth 3 marks. Task 2 is worth 30 marks. You are required to complete both tasks.
Task 1: A bounty on the toad
The cane toad (Bufo marinus) is an introduced pest that has been particularly destructive to some native Australian wildlife. Some Australian politicians have called for a bounty as a solution to the cane toad epidemic. The idea is that people would be paid a fixed dollar amount for each cane toad that they kill and turn in to authorities. Using economic principles, answer the following two questions. (No data is needed to complete this task.)
(a) What is the likely impact of the bounty on the number of cane toads killed?
(1 mark)
(b) Will a bounty necessarily result in a reduction of the population of cane toads? Explain your answer.
(2 marks)
(3 marks total for Task 1)
Task 2: Breaking bad – economic incentives and the international drug trade
The production and distribution of drugs is illegal in most countries. Authorities prosecute drug producers and consumers, with varying success. In this task we explore how developments in legal markets may spill over to affect illegal markets. We will analyse the Mexican drug trade. This case study comes from the article by: Oeindrila Dube, Omar García-Ponce and Kevin Thom. 2016. From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector, Journal of the European Economic Association, 14(5):1181–1224.
http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=edsgao&AN=edsgcl.464777017&authtype=sso&custid=deakin&site=eds-live&scope=site.
Note that the analysis in this reference is advanced and you do NOT have to read this article to complete this task.
(a) In 1994, Canada, the USA, and Mexico established the North American Free Trade Agreement (NAFTA). NAFTA reduced Mexico’s import tariffs on corn, resulting in a 20% drop in the price of corn in Mexico. With the aid of a diagram, illustrate the market for corn in Mexico before and after the introduction of NAFTA. Explain the impact this is likely to have had on domestic Mexican production and consumption of corn, and economic welfare. (No data is needed to complete this task.)
(5 marks)
Page 4 of 10
(b) Some Mexican corn farmers in economically depressed areas are able to use their land to grow
marijuana and poppy plants (used to produce opium). Use demand and supply analysis to
illustrate the market for illegal crops before and after NAFTA. Explain why developments in the
corn market may or may not affect the production of crops used to produce drugs. (For this task,
assume that the likelihood of being caught/penalized does not change with the introduction of
NAFTA.)
(5 marks)
(c) Use the Mexican Crop Data in the Assessment Resources folder (on the MAE101 Cloud site) to
illustrate the association between the price of corn and the total value of marijuana seized by the
Mexican army.1 (The data come from the above-cited Dube et al., 2016, study.) (Hint: you can
use Excel or any other software to produce a scatter diagram.) Is there any noticeable pattern in
the data? What economic principles can you use to explain this pattern in the data?
(5 marks)
(d) One feature of the Mexican drug market is the presence of drug cartels. With the aid of a diagram,
illustrate and discuss the production and price decisions of a drug cartel.
(5 marks)
(e) Another feature of the Mexican drug market is the escalation of cartel related violence.2 Rival
groups clash to secure land for growing illegal crops. Violence is also used by cartels to enforce
cooperation between cartel members. How might the price of corn affect drug cartel violence?
(2 marks)
(f) Reflecting upon this case study and your answers to the questions above:
i. Which outcomes were intended? (1 mark)
ii. Were there any unintended consequences? (1 mark)
iii. Discuss two policies that you would recommend in response to this situation.
(6 marks)
(30 marks total for Task 2)
1 Data on marijuana grown is not available; drug producers do not report this information to the government. However,
crops seized by the army is a good ‘proxy’ or estimate of what is actually grown.
2 According to Dube et al. (2016), there were 50,000 drug cartel related killings in the three-year period 2007-2010.
Page 5 of 10
PART B: INTENDED CONSEQUENCES
This part of the assignment also consists of two (2) tasks. Task 3 is worth 5 marks. Task 4 is worth 12 marks. Please complete both tasks.
Task 3: Political ties and economic welfare
Most government interventions are designed to modify market outcomes, and the aim is usually to improve economic welfare. However, some interventions are specifically motivated purely by political considerations. For this task, we will consider political intervention in the labour market in Venezuela. This case study comes from the article by: Chang-Tai Hsieh, Edward Miguel, Daniel Ortega, and Francisco Rodriguez. 2011. The Price of Political Opposition: Evidence from Venezuela’s Maisanta, American Economic Journal: Applied Economics 3: 196–214.
http://ezproxy.deakin.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=edsjsr&AN=edsjsr.41288634&authtype=sso&custid=deakin&site=eds-live&scope=site.
Note that the analysis in this reference is advanced and you do NOT have to read the entire study to complete the assignment. You should, however, read pages 196-198.
(a) Figure 1 on page 197 of the Hsieh et al. (2011) article shows that over one million voters who signed a petition to remove President Hugo Chávez from office were discriminated against and experienced a drop in their wages and employment. Use demand and supply analysis to illustrate this situation.
(3 marks)
(b) With the aid of a diagram, discuss the impact this political event is likely to have had on Venezuela’s production possibilities and economic welfare.
(2 marks)
(5 marks total for Task 3)
Page 6 of 10
Task 4: Can carbon taxes curtail carbon emissions?
In topics 2 and 3 of MAE101, we studied taxes as a means of reducing consumption and generating government revenue. We will study the use of taxes to tackle climate change, negative externalities, and environmental issues in Topic 5, Week 9. Hence, for this task, we will ignore issues relating to negative externalities.
The aim of task 4 is to analyse the impact of carbon taxes on fuel consumption and carbon dioxide emissions. Carbon taxes are a market-based solution to climate change. The idea behind these taxes is that the ‘polluter’ pays a tax per tonne of carbon dioxide emitted. As a result of the carbon tax, users of fossil fuels pay a higher price for fossil fuels.
A major policy debate is whether carbon taxes are effective in reducing carbon emissions. We will use a case study of the introduction of carbon taxes in Sweden. Sweden introduced carbon taxes in 1990. The aim of these taxes was to reduce fuel consumption in Sweden and as consequence, to reduce carbon emissions. The reference for this task is the article by Julius Anderson. Carbon Taxes and CO2 Emissions: Sweden as a Case Study, American Economic Journal: Economic Policy (Forthcoming). A working paper version can be found at: https://www.cccep.ac.uk/wp-content/uploads/2015/10/Working-Paper-212-Andersson.pdf.
Note, you do NOT have to read this article to complete this task.
(a) Use the Carbon Emissions Data in the Assessment Resources folder (on the MAE101 Cloud site) to construct a time series graph that illustrates the change in per capita fuel consumption in Sweden over the years 1960 to 2005. The data come from the above-cited Anderson study. Using demand and supply analysis, explain the impact of the carbon tax on fuel consumption per capita? (As noted above, for this question ignore any issues relating to negative externalities.)
(6 marks)
(b) Use the Carbon Emissions Data in the Assessment Resources folder (on the MAE101 Cloud site) to construct a time series graph that compares carbon emissions in Sweden relative to the average of 14 OECD economies, over the years 1960 to 2005. What was the impact of the carbon tax on carbon emissions? How does Sweden compare to the other OECD economies?
(5 marks)
(c) Were carbon taxes successful in their stated goal in the period studied, 1960-2005?
(1 mark)
(12 marks total for Task 4)
Page 7 of 10
Requirements: further details
CloudDeakin does not accept some file formats, including Excel files. You will only be able to upload one file, which must be in PDF format. You can work in other formats such as Word and Excel, as long as all words and diagrams/graphs etc. are combined into one file and saved as a PDF for upload. CloudDeakin will accept word documents, but diagrams tend to jump around/become unstable, so submitting in PDF format ensures the assessor grading your assignment sees your diagrams as you have drawn them. Do not submit once in word format and then resubmit in PDF format after the due date/time – your assignment will be date stamped late, and your previous version overwritten.
Presentation
Assignments must be typed. Answers should be in full sentences, which have been checked for grammar and spelling. Marks will be deducted if your ideas are expressed poorly or are confused, and cannot be awarded if your expression is ambiguous. Overly wordy answers that include irrelevant information will also be penalized. All diagrams should have a relevant title, and each axis on the diagram should be correctly labelled. Label all points of interest/relevance.
Digital literacy is one of Deakin’s Graduate Learning outcomes and among the Unit Learning Outcomes of MAE101. It requires students to be capable of using modern technologies to find, use, and disseminate information. To achieve this goal, it is required that ALL contents of your assignment should be digitally produced, including explanations, diagrams, etc. There is a short video on how to draw diagrams by computer in Topic 2 (Weeks 2 and 3) of your Learning Resources in the MAE101 Cloud site. Photos of text book diagrams will receive zero – please do your own.
Word limit
2000 words (flexible). In first year economics, word limits are less important than concise and relevant descriptions and analysis of the models, diagrams and arguments presented. The word limit is a guide only and is not binding; deciding for yourself if you have answered the question fully, concisely and coherently is an important skill to develop. A relevant, concise and well explained answer will gain full marks. The words in any graphs/diagrams, tables, equations and the references do not count towards the word limit.
Referencing
You must cite all ideas that are not your own. You should use the Harvard (name-date) referencing style within the text of your answer to cite any source you use, and then include the full reference at the end of your assignment. This means that, rather than placing a reference in a footnote, you should provide a reference of the source inside the text with the name of the author and the date of publication of the work cited. Example: Far from being the inventor of the idea of perfect competition, Adam Smith was in fact among the last representative of economists who saw competition as a dynamic process of rivalry (McNulty 1967). This means you are citing a 1967 article authored by someone
Page 8 of 10
called McNulty as the source of the idea in the sentence. You would then list that article in a list of references at the end of your paper:
McNulty, P.J. 1967. A Note on the History of Perfect Competition, Journal of Political Economy 75: 395-399.
There are many ways to run the details of a name-date style. You should pick up only one style and use it consistently. Please see the Harvard webpage put out by Student Life (http://www.deakin.edu.au/students/study-support/referencing/harvard).
Importantly, do not just quote chunks of the text – you must express your answer in your own words.
Submission Instructions
Submit an electronic copy of your assignment to the Drop Box in CloudDeakin (under the Assessments tab), before 11:45 p.m. on Monday 2nd September. Do not leave it until the last minute as CloudDeakin can become congested around submission time. Assignments are counted as “on time” if submitted by 11:45pm AEST or AEDT on the due date. If necessary, you can look up your local time at: http://www.timeanddate.com/worldclock/
You will receive an email to your Deakin email address confirming that your assignment has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment dropbox folder after upload. Please check for, and keep, the email receipt of the submission.
It is your responsibility to check you have submitted the correct file, in the correct format. Screenshots of file information showing that the file you meant to submit has not been altered after the due date will not be accepted as evidence of completion before the due date, should you accidently upload a different file. The assignment that will be graded will be the one in the drop box – make sure it is the correct one.
You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you.
Do NOT email assignments.
Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.
Extensions
Extension requests made before the due date should be made to the Unit Chair (Chris Doucouliagos). They are rarely granted and rarely for more than a few days, so do not depend on an extension. Extensions can be granted for documented serious illness (not just on the day the assignment is due!, but lasting a few days before the due date), or for compassionate reasons.
Any extension request must be received prior to the due date.
Extensions requests must be supported by reasonable documentation along with a draft of your assignment indicating progress made towards completion. So, start early.
Page 9 of 10
Extension requests made after the due date has passed need to be via a formal application for special consideration under the new university wide centralized process (https://www.deakin.edu.au/students/studying/assessment-and-results/special-consideration).
Work or holiday reasons are NOT grounds for an extension – you are expected to manage these issues as part of your studies. You are strongly encouraged to start early and to continually backup your assignment as you progress. Computer crashes or corrupted files will NOT be accepted as valid reasons for an extension of any length.
