Business Economics Assignment

Question 1

Explain with numeral example that marginal revenue is always lower than the price when monopolists charge single price for all units to sell.

Question 2

Starbucks Closed 61 Coffee Shops in Australia
Starbucks slashed its Australian presence after years of multimillion-dollar losses and a failure to make inroads. The world's largest coffee chain axed 685 jobs and close 61 of 84 stores nationwide.

People interviewed said:

1) there are a lot of good coffee shops;
2) Starbucks had issues with site selection and a limited food menu;
3) Australians like to sit down and relax with a cup of coffee rather than taking it away in a paper cup; and
4) Starbucks was struggling with overpriced coffees that failed to meet the Australian standard.

Answer the following questions:

a) In what market does Starbucks compete?
b) Describe the revenue, costs, and profit that Starbucks expected when it entered this market. Draw a graph to illustrate your answer.
c) How did the factors listed as (1) to (4) above affect Starbucks' revenue, costs, and profit? Draw a graph to illustrate your answer.

Question 3

How firm supply curve is derived in the short run? Explain with graphs.

Question 4

The figure above shows the flows of expenditure and income in Australia. During 2006-07, B was $585 billion, C was $231 billion, D was $241 billion, and E was -$13 billion.

Name the flows and calculate the Aggregate expenditure and Aggregate Income and GDP. Explain among their relationships.

Part B

Question 1

The subsequent events have occurred globally in recent years:

• A deep recession hits the world economy.
• The world oil price rises sharply.

Do you think the economy can be rescued if the Keynesian policy is followed? Explain your arguments.

Question 2

Poor India Makes Millionaires at Fastest Pace

India, with the world's largest population of poor people living on less than a dollar a day, also paradoxically created millionaires at the fastest pace in the world in 2007. ... Growing them at a blistering pace of 22.7 per cent, India added another 23,000 more millionaires in 2007 to its 2006 tally of 100,000 millionaires measured in dollars. ... In contrast, developmental agencies put the number of subsistence level Indians living on less than a dollar a day at 350 million and those living on less than $2 a day at 700 million. In other words, for every millionaire, India has about 7,000 impoverished people. ...

Following the limitations of real GDP estimation and particularly estimation problems associated with across countries examine the validity of this statement.