BUS102 Introduction to Microeconomics – Group Assignment T1 2026
Notes and Guidelines for Group Assignment
Due: 14 May 2026
Topic Four problem-solving questions that require written answers
1. General information This group assignment is worth 20 marks of the total assessment and is to be submitted through Moodle by 11.59pm, Wednesday 14 May 2026. • There are 4 questions and each question will be marked out of 10 marks, giving a total of 40 marks. The marks will then be converted to a total of 20 marks for 20 per cent of your overall course assessment. • The marks uploaded in Moodle will be out of 20. • Late submission by one day attracts a loss of 2 marks (10 per cent) each day until 5.00pm Friday 16 May 2026. • Assignments submitted after 5.00pm Friday 16 May 2026 will not be accepted and will receive zero.
Each group must consist of four (4) students. The number can be varied only with the lecturer’s written permission. One-person or two-person groups are not allowed. Each student name and student ID must appear clearly on the Assignment Cover Sheet and on the last page of the assignment. In the case of a one-person or two-person submission, the assignment will be marked out of 12 or 15 respectively (not 20), resulting in an automatic loss of marks for not forming a proper group.
You must follow the format explained below. Failure to do so will result in a loss of marks. • All answers must be clearly typed and printed. Hand-written submissions will not be accepted. • Type every assignment question and sub-question in order, using headings. • Start each main question on a new page. For example, if Question 1 (a)–(f) ends on page 2, begin Question 2 on page 3.
Answers must be written clearly and concisely, focusing on the main points and avoiding irrelevant material. Analyse, explain and show exactly how and why you reach each answer. Simply stating the answer without explanation will not receive full marks. Include appropriate and relevant diagrams, charts and tables in your explanation. Create these using Microsoft Word, Excel or PowerPoint tools only; hand-drawn diagrams are not acceptable.
Copying content from other groups constitutes a serious breach of academic integrity and will be penalised heavily. Write all answers in your own words.
Each group must nominate a coordinator who will submit only one copy of the assignment through Moodle in MS Word .docx format (not PDF). Indicate the coordinator on the Assignment Cover Sheet. Each group must also submit one hard copy to the librarian.
All group members must discuss the work together and every member must read and check the final assignment before submission.
2. Assignment Questions
Question 1 – 10 marks Part A Australia produces ethanol from sugar cane, and the land used to grow sugar cane can also grow food crops. Suppose that Australia’s production possibilities for ethanol and food crops are as shown in the table. (a) If Australia increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of an additional barrel of ethanol? (1 mark) (b) Does Australia face an increasing opportunity cost of ethanol? What feature of Australia’s PPF illustrates increasing opportunity cost? (1 mark)
Part B The table sets out the demand and supply schedules for bananas. (c) Draw a graph of the market for bananas. What are the equilibrium price and quantity? Explain why. (1 mark) (d) If the price of bananas was $1.50 a box, what would be the situation in the banana market (shortage or surplus)? Explain why and how the price and quantity would adjust. (1 mark) (e) Suppose a cyclone destroyed some banana farms in Queensland and the quantity of bananas supplied decreased by 500 boxes a week at each price. Explain what would happen to market supply and demand and how the equilibrium price and quantity would adjust. Illustrate the changes on your graph. (3 marks) (f) Suppose the cyclone decreased banana supply by 500 boxes a week at each price, but at the same time demand for bananas increased by 500 boxes a week at each price. Explain what would happen to the market equilibrium price and quantity. Illustrate the changes on your graph. (3 marks)
Question 2 – 10 marks Part A A tour agency’s demand schedule for hotel rooms is given in the table. (a) What happens to total expenditure of the tour agency if the price falls from $400 to $350 per night per room? Is the demand for hotel rooms elastic, inelastic, or unit elastic? (1 mark) (b) What happens to total expenditure of the tour agency if the price falls from $300 to $250 per night? Is the demand for hotel rooms elastic, inelastic, or unit elastic? (1 mark) (c) Calculate the demand elasticity of the hotel room when the price falls from $400 to $350 per night per room and when the price falls from $300 to $250, respectively. (1 mark)
Part B When Hana’s income was $3,300, she bought 5 kg of rice and 2 kg of beef a month. Now her income is $4,400 and she buys 4.5 kg of rice and 2.75 kg of beef a month. (d) Calculate Hana’s income elasticity of demand for beef. Show your calculation. (1 mark) (e) Calculate Hana’s income elasticity of demand for rice. Is rice a normal good or an inferior good? Show your calculation. (2 marks)
Suppose a flood cuts the quantity of sugar cane grown by 4 per cent. (f) If the price elasticity of demand for sugar cane is 0.5, by how much will the price of sugar cane rise? Show your calculation. (1 mark) (g) If sugar makers estimate that this change in the price of sugar cane will increase the price of sugar by 15 per cent and decrease the quantity demanded for sugar by 3 per cent, what is the price elasticity of demand for sugar? Show your calculation. (1 mark) (h) If coffee makers estimate that, with the change in the price of sugar, the quantity of coffee demanded will decrease by 6 per cent, what is the cross elasticity of demand for coffee with respect to the price of sugar? (1 mark)
Question 3 – 10 marks Part A The table shows the demand and supply schedules for low-cost housing. (a) If the government puts a rent ceiling of $650 a month, what is the rent paid and how many rooms are rented? Explain why. (1 mark) (b) Now the government strictly enforces a rent ceiling of $550 a month. How many rooms are rented? Is the low-cost housing market efficient? Explain why. (1 mark) (c) If the government strictly enforces a rent ceiling of $550 a month, what happens to consumer surplus and producer surplus? Using the table information, draw a diagram to explain. Also calculate total housing search costs and deadweight loss. Show your calculation. (3 marks)
Part B The US Farm Bill maintains the domestic price of wheat at $350 per tonne, which is above the market equilibrium level of $300 per tonne, to support domestic wheat growers. At the market equilibrium, 100 tonnes are supplied. (a) Is the wheat price control in the US a price floor or a price ceiling? (1 mark) (b) On a graph, show and explain if the price control in the US creates a shortage or a surplus in the market for wheat. Assume that the US does not trade wheat internationally. (2 marks) (c) Show on a graph and explain how the price control in the US changes consumer surplus, producer surplus, and deadweight loss in the domestic wheat market. (2 marks)
Question 4 – 10 marks Part A South Korea is one of the major beef importing countries. With no international trade, Korea’s equilibrium price for beef was $10 million per kilo tonne and equilibrium quantity was 30 kilo tonne. If Korea opens its market to international trade with no tariff, domestic supply would be 10 kilo tonne and domestic demand would be 50 kilo tonne at the world price of $5 million per kilo tonne. However, Korea currently imposes a 40 per cent tariff rate on all imported beef. With the 40 per cent tariff, Korea’s domestic supply and domestic demand are 20 kilo tonne and 40 kilo tonne respectively. Assume that the intercept of the supply curve is $3 million and the demand curve is $15 million per kilo tonne. (a) Analyse the effects of the 40 per cent tariff rate in Korea on the price, domestic supply and demand, and beef imports in comparison with the no-tariff case. (2 marks) (b) Draw a graph to identify the areas of gains and losses from the trade with the 40 per cent tariff rate with brief explanation. Then calculate the actual values of change in consumer surplus, producer surplus, tariff revenue and the amount of deadweight loss. Show your calculation. (3 marks) (c) Suppose that Korea removes the tariff but instead imposes an import quota of 20 kilo tonne. Draw a graph to identify the areas of gains and losses from the import quota, importers’ profit, and the deadweight loss. Provide your explanation. (2 marks)
Part B The figure illustrates the market for tomatoes. A small town is surrounded by a large tomato farm. The tomato grower sprays the plants with chemicals to control disease and the chemical waste flows into the river passing through the town. The marginal external cost of the chemical waste is equal to the marginal private cost of producing tomatoes. (d) Draw a graph that shows the marginal social cost (MSC) curve together with the marginal private cost (= S) and marginal social benefit (= D) curve. (1 mark) (e) If no one owns the river and the town takes no action to control the waste, what is the quantity of tomatoes produced and the deadweight loss created? (1 mark) (f) If the town owns the river and makes the tomato grower pay the cost of pollution, how many tomatoes are produced? What does the grower pay the town per tonne of tomatoes produced? (1 mark)
Sample Answer Excerpt (Question 3(c) – Rent Ceiling Analysis)
When the government enforces a strict rent ceiling of $550 per month the quantity of rooms rented falls to 40 while the quantity demanded rises to 70 creating a shortage of 30 rooms. Consumer surplus increases by the area between the demand curve and the new price up to 40 units but producer surplus shrinks dramatically because landlords receive far less revenue. Total housing search costs equal the area of the triangle representing the shortage and deadweight loss equals the lost surplus from the 30 units that are not rented. These outcomes match the standard prediction that binding price ceilings reduce efficiency by preventing mutually beneficial trades. Recent empirical reviews of rent-control programs confirm that controlled rents fall for sitting tenants but overall housing supply contracts and search costs rise for new renters. Students analysing such policies should always calculate both the transfer and the efficiency loss separately to see the net social cost. One major study of rent regulation across multiple countries concludes that while rent controls achieve short-term affordability for existing tenants they generate persistent deadweight loss and reduced residential construction (Kholodilin, 2024, https://doi.org/10.1016/j.jhe.2024.101999).
Microeconomic Policy Analysis
Price ceilings and floors continue to appear in housing and agricultural markets worldwide yet produce predictable inefficiencies that students can quantify with supply-and-demand diagrams. Tariff and quota analysis follows the same logic of comparing free-trade and protected outcomes to identify transfers and deadweight loss. Externalities such as chemical runoff in farming show why private costs diverge from social costs and why corrective taxes or property rights can restore efficiency. Recent meta-analyses of food demand elasticities demonstrate that income and price responses vary by product and region providing useful benchmarks for predictions in assignment questions like those on rice and beef. Cross-checking textbook models against current empirical studies gives the clearest understanding of real-world market interventions.
- Submit a group assignment for BUS102 T1 2026 answering four problem-solving questions on production possibilities, market equilibrium, elasticity, rent controls, tariffs and externalities with diagrams and calculations.
- Complete the 2026 BUS102 Introduction to Microeconomics group assessment consisting of four 10-mark questions on supply demand analysis price floors ceilings and international trade effects.
- Write detailed answers with graphs for the BUS102 group assignment covering opportunity cost elasticity rent ceilings tariffs quotas and negative externalities.
References
Colen, L. et al. (2018) ‘Income elasticities for food, calories and nutrients across Africa: A meta-analysis’, Food Policy, 77, pp. 116–132, available at: https://doi.org/10.1016/j.foodpol.2018.10.004.
Kholodilin, K.A. (2024) ‘Rent control effects through the lens of empirical research’, Journal of Housing Economics, available at: https://doi.org/10.1016/j.jhe.2024.101999.
Li, Q. et al. (2023) ‘Externalities of pesticides and their internalization in the wheat–maize cropping system – a case study in China’s northern plains’, Sustainability, 15(16), p. 12365, available at: https://doi.org/10.3390/su151612365.
Valera, H.G. et al. (2022) ‘Estimating food demand and the impact of market shocks on food expenditures: the case for the Philippines and missing price data’, Q Open, 2(2), available at: https://doi.org/10.1093/qopen/qoac030.
Artuc, E. et al. (2021) ‘Household impacts of tariffs: data and results from a multi-country trade model’, The World Bank Economic Review, 35(3), pp. 563–585, available at: https://doi.org/10.1093/wber/lhaa030.
