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Assessment 3: Report Page 1 of 5 ASSESSMENT BRIEF Subject Code and Title ECON6000 Economic Principles & Decision Making Assessment Assessment 3: Report Individual/Group Individual Length Up to 3000 words Learning Outcomes 1. Interpret and successfully apply economic concepts of supply and demand for effective organisational problem solving. 2. Apply quantitative methods to forecast complex business variables including demand, supply, production and costs. 3. Critically analyse production processes and cost functions and classify the main forms of market structures as well as recommend appropriate pricing and strategies. 4. Critically evaluate the role and impact of various forms of government intervention in the economy including the implications of competition and deregulation policy for managerial practices. Submission By 11:59 PM AEST/AEDT Friday at the end of Module 6 Weighting 40% Total Marks 40 marks Context: This assessment allows you to apply your knowledge on the concepts and ideas discussed during the Modules. This assessment draws on your work for assessment 2. Assessment 3: Report Page 2 of 5 Instructions: Schmeckt Gut plans the market launch for the Schmeckt Besser energy bar in Atollia within the next couple of months. The Research Department of Schmeckt Gut has conducted a market analysis of Atollia. The results are provided for you in the supplied EXCEL file. Based on international sources, the Research Department is comfortable in working with the following scenarios on the future development of average income in Atollia, the inflation rate development and tariff rates on imports from Industria: - Income growth: 1% increase or 3% increase or 5% increase or 7% increase - Inflation rate development: 2% increase or 3% increase or 4% increase or 5% increase - Tariffs on imports from Industria: 7.5% or 10% or 5% or free trade Note: These developments are not necessarily matched to each other in the sequence shown above; meaning that we do not know if the 1% increase in income is associated with a 2% increase in inflation rate and a 7.5% tariff rate. Your task: Your task is to write a 3,000-word report addressed to the Board of Directors of Schmeckt Gut in which you address the following: - Do you think you can match the different projections? That is, do you think that a 5% increase in income is associated with a 10% tariff rate and a 2% inflation rate? Explain by linking your discussion to the following concepts: o supply and demand o aggregated demand and aggregated supply o the Philipps Curve, and o the Laffer curve. - What impact would the different predictions of income development, inflation rate development and tariff rate development have on the potential demand of Schmeckt Gut? Conduct a multiple regression analysis using data in the supplied Excel file and then interpret the results. Fully discuss and explain their implications. - Make recommendations as to what the Board of Directors should do under each of your scenarios, based on your matching of the predictions. The precise format of the report will be informed by research undertaken by the student using the Torrens University library. Formal document sections such as executive summary, table of contents and appendices are not counted in the word count. Assume that the prescribed word limit is literally a limit and that the board will reject any report that breaches it. Assessment 3: Report Page 3 of 5 Final report clarifications 1. If the government in Atollia wants reduce consumption of imported products they may increase tariffs. In this question you are required to test what will happen if, say for example, 5% increase in income is associated with 2% inflation rate, etc. 2. You need to predict how changes in average in income, tariffs, and inflation would impact on the average demand. In this case, you need to run regressions once again. For example, Income 3%, 5% or 7%. If you multiply the income column with these percentage you will get the values for all 3 scenarios. Tariffs 7.5% , 10% , 5% or free trade. Same as above Inflation is a Nominal Income (indicated as “average income”) minus inflation. That can also be incorporated. Example: income of 15000 – 3% inflation Conducting a multiple linear regression (in log linear form) which is Log Y = α + β1X1 +β2X2 +β3X3 + β4X4. The log is in base e so you need to put in Excel the formula = LN (average demand). In case, you want to know more about how to do it in excel, do go youtube with these keywords or see the links below. That should be interpreted as the impact of these variables (variable 1, etc) on the demand. Say, with + sign increase, with – sign (increase in tariff, which is actually tax, and its impact on demand). Another hint: according to Laffer Curve as taxes (tariffs in our case) increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point would cause people not to work as hard or not at all, thereby reducing tax revenue and as a result their real income. Or: According to Phillips; Decreased unemployment in an economy correlates with higher rates of inflation (up to a certain extent). That does not necessarily translates into greater total real income in the economy but we could assume that more people will be employed affecting sales dependant on the number of stores (this is just an assumption). https://www.youtube.com/watch?v=wBocR96UdyY https://www.youtube.com/watch?v=O7TMCYuDbDc https://www.youtube.com/watch?v=tlbdkgYz7FM&t=23s https://www.youtube.com/watch?v=wBocR96UdyY https://www.youtube.com/watch?v=O7TMCYuDbDc https://www.youtube.com/watch?v=tlbdkgYz7FM&t=23s ECON6000 Assessment 2 brief Page 3 of 5 Learning Rubrics Assessment Attributes Fail 0-49 (Unacceptable) Pass 50- 65 (Functional) Credit 66-75 (Proficient) Distinction 76-85 (Advanced) High Distinction 86-100 (Exceptional) Grade Description Evidence of unsatisfactory Evidence of satisfactory Evidence of a good level of Evidence of a high level of Evidence of an (Grading Scheme) achievement of one or more achievement of course learning understanding, knowledge achievement of the exceptional level of of the learning objectives of objectives, the development of and skill development in learning objectives of the achievement of learning the course, insufficient relevant skills to a competent relation to the content of the course demonstrated in objectives across the understanding of the course level, and adequate course or work of a superior such areas as entire content of the content and/or unsatisfactory interpretation and critical quality on the majority of the interpretation and critical course demonstrated in level of skill development. analysis skills. learning objectives of the analysis, logical such areas as course. Demonstration of a argument, use of interpretation and high level of interpretation methodology and critical analysis, logical and critical analysis skills. communication skills. argument, creativity, originality, use of methodology and communication skills. Knowledge and Limited understanding of Knowledge or understanding of Thorough knowledge or Highly developed A sophisticated Understanding of required concepts and the field or discipline. understanding of the field or understanding of the field understanding of the economic concepts knowledge discipline/s. Supports or discipline/s. field or discipline/s. of supply and Resembles a recall or summary personal opinion and demand Key components of the of key ideas. information substantiated by Discriminates between Systematically and assignment are not evidence from the assertion of personal critically discriminates addressed. Often conflates/confuses research/course materials. opinion and information between assertion of assertion of personal opinion substantiated by robust personal opinion and with information substantiated Demonstrates a capacity to evidence from the information 25% by evidence from the explain and apply relevant research/course substantiated by robust research/course materials. concepts. materials and extended evidence from the reading. research/course materials and extended Well demonstrated reading. capacity to explain and apply relevant concepts. Mastery of concepts and application to new ECON6000 Assessment 2 brief Page 4 of 5 situations/further learning. Critical reasoning, presentation and defence of an argument and/or position in context of organisational problem solving 25% Specific position (perspective or argument) fails to take into account the complexities of the issue(s) or scope of the assignment. Makes assertions that are not justified. Specific position (perspective or argument) begins to take into account the issue(s) or scope of the assignment. Justifies any conclusions reached with arguments not merely assertion. Specific position (perspective or argument) takes into account the complexities of the issue(s) or scope of the assignment. Others’ points of view are acknowledged. Justifies any conclusions reached with well-formed arguments not merely assertion. Specific position (perspective or argument) is expertly presented and accurately takes into account the complexities of the issue(s) and scope of the assignment. Justifies any conclusions reached with well- developed arguments. Specific position (perspective or argument) is presented expertly, authoritatively and imaginatively, accurately taking into account the complexities of the issue(s) and scope of the assignment. Limits of position are acknowledged. Justifies any conclusions reached with sophisticated arguments. Analysis and Limited synthesis and Demonstrated analysis and Well-developed analysis and Thoroughly developed Highly sophisticated application with analysis. synthesis of new knowledge synthesis with application of and creative analysis and and creative analysis, synthesis of new with application. recommendations linked to synthesis with application synthesis of new with knowledge related Limited analysis/synthesis. of pretested models and /