ECON7200 Economic Principles (M)
Assignment 1 (Week 1 – Week 3)
1. Suppose you are a farmer with 20 hectares of land on which you could grow either wheat or barley.
You can allocate however much land you want to each crop.
a. Draw a Production Possibilities Frontier depicting this situation.
b. Explain what a Production Possibilities Frontier is and what the diagram represents, including
what points on, below and above the PPF represent.
c. Explain why the PPF that you have drawn has the shape that it does.
d. Is it possible to use just the PPF to find the best allocation for the crops? Explain.
2. Read the following excerpts from ‘Goat meat as alternative meat source has producers struggling to
keep up with demand’ by Jessica Schremmer 2 August 2019.
Goat meat producers are struggling to keep up with demand as consumers turn to alternative meats,
and a dwindling supply due to the drought sees prices jump to record levels.
Prices remain at $9–10 per kilo, after over-the-hook prices hit an all-time high of $10.30 per kilo
carcase weight in May this year.
Meat and Livestock Australia's Julie Petty said last time they saw a significant price spike was in 2017
at $7.50 but current prices were unprecedented.
"For a producer, if you do have animals that are ready to be sent to market it's an excellent price to
be receiving for these animals," Ms Petty said.
However, she explained the drought and tough seasonal conditions forced many producers to destock
their properties some time ago, which led to a reduced supply.
"We are seeing increased strong demand on both the international and domestic market," she said.
Goat Industry Council Australia's Campbell McPhee said, as the world market was screaming out for
more of Australia's goat meat, he hoped it encouraged people to invest in the industry.
"Domestically there has certainly been an increase of consumption of goat meat and people are
looking for an alternative meat."
Your task: Use the demand and supply model (including a diagram or diagrams) to support an
explanation of why the price of goat meat has recently reached an all-time high according to this
3. Read the following article: Netflix Tested a Price Hike in Australia (FORTUNE) By TOM HUDDLESTON JR.
May 15, 2017 (https://fortune.com/2017/05/15/netflix-price-hike-australia/)
Netflix customers in Australia could soon be facing steeper monthly charges.
The popular streaming service on Monday confirmed that it recently tested higher subscription prices
for new customers in Australia. The company—which has nearly 100 million global subscribers and
expanded to Australia in 2015—has reportedly tested raising prices for new subscribers by as much
as three Australian dollars (AU).
Netflix’s test resulted in some Australian customers seeing price increases for the streaming service’s
Basic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard plan increased AU$2
to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per month, according to The
Netflix confirmed the tests, but emphasized that it has not yet formally announced any permanent
price increases. “We continuously test new things at Netflix and these tests typically vary in length of
time,” the company said in a statement. “In this case, we are testing slightly different price points to
better understand how consumers value Netflix. Not everyone will see this test and we may not ever
offer it generally.”
Your task: Discuss why you think Netflix conducted this test and what you think they found from that
test based on their later decisions.
Refer in particular to concepts from the Week 3 lecture topic, such as what price elasticity of
demand is and how it is calculated and used, its relationship with revenue, and relevant
determinants of price elasticity of demand.
Grading: Please refer to the grading rubric that is available on MyUni, and ensure that you have
addressed the assessment criteria found there.
Additional Information and Tips
Because this is your first written assignment in this course, here are some extra tips about how to
approach not just this task but also others throughout the semester. (see next page)
Short and concise answers are preferred. Given the nature of the questions in this assignment,
answers should target about three pages length but not exceed four pages (12pt Times New Roman,
double spaced) in total, including graphs.
You should draw your own diagrams, either electronically or by hand. If you draw by hand, you can do
so on paper and then scan or take a photo to get them into a typed electronic document.
Please make sure that you do not inappropriately take content, either written or diagrams, from other
sources and that you appropriately reference any content if you need to.
This is not a research assignment, so you do not need to specifically seek out references other than
the article provided and the course content.
However, any sources that you use should be appropriately referenced. Although you may discuss this
task with classmates informally, each student must submit their own individual work, which should
not be high in similarity to another student’s. Please keep in mind that the assignments will go through
an electronic plagiarism detection system.
Please ask on the MyUni discussion board as soon possible before the due date if you require any
further clarifications on the format, requirements and expectations for this assignment.