nstructions on Individual Assessment II:

| June 14, 2016

nstructions on Individual Assessment II:
Media Analysis
You are required to select a newspaper article on a microeconomic issue and apply your knowledge of microeconomic theory to explaining and analysing the article. Appendix 1 contains three short articles. You may choose ONE for your analysis.
? You should aim to write approximately 1500 words, excluding diagrams.
? You must submit the written paper, WITH THE ARTICLE ATTACHED
1. It is important to spend time in selecting an appropriate article to analyse. A ‘good’ article can help to focus your analysis and lead to a better assignment mark. One of the beauties, apart from our unmatched hospitality, about studying economic in Australia is that every week’s topic is likely to be related to the main policy discussion of the week and, hence, one can find a least one newspaper commentary on it.
2. The article can relate to any concepts covered in the set chapters – it may relate to just one chapter or several chapters.
3. The assignment is worth 15%. Marks are allocated according to the marking guide in the unit outline.
4. Include an introduction where you provide an overview or ‘essence of the story’ – explain what the article is about. What is the purpose of your assignment? What economic models/concepts are you going to use to analyse the article? For example, will you be using the model of demand and supply, concepts such as opportunity cost, elasticity, consumer’s and producer’s surplus? (about 150-250 words)
6. The analysis – this is the main part of the assignment (about 900-1000 words). Incorporate diagrams into your analysis – they must be drawn by a document processor, NOT HAND DRAWN. Do not put them into an appendix. Make sure you refer and explain your diagrams and link them to the article. DO NOT devote your analysis to writing out detailed notes from your text. You are required to analyse the article – not summarise your textbook. Incorporate quotes from the article into your analysis to support your arguments. You may find information in other related articles – you will need to reference these in your assignment.
7. Conclusion – a summary of key points from the analysis. Do not introduce any new material. How well did the theory explain the article? (about 150-250 words) 8. Reference list – the bare minimum is the article you used and an economics text. Try and find other related articles; perhaps find some data to add to your analysis. Do some simple research, use the web to locate other sources of information that may relate to your topic – this will impress the marker.
Appendix 1
China’s Chronic Fuel Shortages Worsen
Channel 9 News
28 October 2011
China’s chronic fuel shortages are worsening with the onset of winter, as output lags behind surging demand. The shortage has been made worse by stockpiling following a recent cut in government’s official wholesale price for fuel products, analysts and government reports said on Thursday.
In a notice on its website on Thursday, the government in Hunan province called on local authorities to prevent illegal sales and hoarding of fuel to ensure ‘orderly supplies’.
The persistent shortages reflect the limitations of China’s system of centralised control of fuel prices. Prices for crude oil have leaped to above $92 a barrel up from about $75 two weeks earlier. Refiners are now under pressure to raise output at a time when rising costs are once again forcing them to produce at a loss.
China’s entire energy sector suffers period shortages due to price controls and other distortions. Utilities have tendered to curb power output when coal prices surge while electricity tariffs remain static. That in turn aggravates fuel shortages when manufacturers turn to diesel generators to make up for power outages.
China’s independent refiners cut production when prices fall, holding back waiting for fuel prices to be adjusted upward again.
‘The supply shortage will be solved with the next adjustment, which I expect within about a half a month’ Han Xiaoping, chief information officer of energy website China5e.com, said. ‘Once the price is raised, the problem is solved.
? Think around the following:
1. Market structure
2. Government regulation and its impact on economic welfare
3. Use appropriate diagrams to illustrate discussion
Finally Superfine Wool Pays
1 April 2011
Superfine wool producers are finally seeing the heavenly combination of good feed and great prices.
‘We haven’t seen the indicator as good since 1988-89’, says Richard Buckmaster of the beautiful Mullion area west of Canberra. Richard Buckmaster grows 17.5 micron wool, the type that makes luxurious fine suits and dresses.
He remembers well selling good ewes just five years ago for $10. Late last year the same type fetched $90/head.
For ten years wool has cost producers dearly. Across Australia, half have left the industry. In the year 2000, we produced 800 million kilograms. This year the clip will be less than half that.
President of Australian Superfine Woolgrowers Helen Cathles welcomes the prices for superfine wool. ‘They are certainly better than what they have been; for ten years they’ve been below the cost of production. Now they range from 1,1000 to 2,0000 c/kg depending on the micron.’
…People are being attracted back to wool, both producers and consumers.
Australia’s commodity forescaster ABARES says wool prices will stay relatively high for the next five years, with competition from high lamb prices keeping wool supply tight.
As Richard Buckmaster prepares his 8,000 sheep for shearing, at $60 worth of wool per sheep, for 1,200c/kg, he suddenly realises he could be looking at a wool cheque of half a million dollars.
? Think around the following:
1. Market structure
2. short run vs long run effects on equilibrium outcomes and profit.
3. Use appropriate diagrams to illustrate discussion
Broome camels ride owner sue council for $1 million
By Glenn Cordingley, Civic Reporter
The Sunday Times PerthNow
11 July 2013
A Broome camel ride business is planning to sue the council for more than $1 million.
Red Sun Camels is saddled with too many dromedaries after a permit row to operate on Cable Beach.
The Shire Broome awarded the company all three permits to operate at the tourist Mecca in 2006. But they were never issued because an appeal to the State Administrative Tribunal (SAT) by rival operators found the council’s tendering process breached the Local Government Act.
The Shire selected Red Sun managing director John Geapen told The Sunday Times he had spent hundreds of thousands of dollars on 35 camels, equipment and his operational set-up after being awarded the licences.
‘From the time the (permits) were awarded to us in June (2006), we only had six months to prepare three camel trains of 16 camels’, he said. We purchased 35 additional camels and spent money on new retail outlet and offices.’
‘The error has been with the council. I have lost big sums of money. They (council) pulled the carpet from me just six weeks before the licences were to start, and I am pursuing compensation for costs and damages.’
Following the adoption of a new policy on commercial activity at Cable Beach, the council readvertised the licences and they were awarded to Red Sun Camels, Ships of the Desert and Broome Camel Safaris. Each pays about $4000 a year for licence, issued for five years.
Shire president Graeme Campbell said: ‘We acted on the best advice we had at the time, which was subsequently found to be flawed. ‘The council will defend any litigation on this matter. I am disappointed that the issue of camels continues to arise given that SAT suggested we put in place a policy which clearly outlined council’s wishes. This had been done with stakeholders having an opportunity to contribute to the policy.’
Red Sun and Ships of the Desert have appealed over dome permit conditions, including setdown areas of camels and that operators act independently of each other.
The matter was heard by senior SAT representative Justice Michael Barker in Broome this week and a decision is pending.
Cable Beach camel rides generate millions in revenue from visitors keen to have their picture taken at sunset.
? Think around the following points:
1. Market structure of for camel rides on Cable Beach
2. The effect on profits under one licence vs. under three licences
3. Sunk costs
4. Use diagrams to illustrate.

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