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Personal Project – Long-Form Writing

The Project (subject to minor variation and clarification)

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This project is a long-form writing project where you are required to come up with

an interesting economic question, and provide some insight on this question using the

methods and tools discussed in this course. You may complete the assignment as a report

in Microeconomics (Type A), or in Macroeconomics (Type B).

Type A: For a Microeconomics report, you will notice some behaviour in your every-

day life which you find unusual and which might be amenable to economic analysis. You

will explain this behaviour, and provide some work towards analysing why this happens

using the tools developed in this course.

Type B: For a Macroeconomics report, you will notice some macroeconomic indicators

or trends which you find unusual and which might be amenable to economic analysis. You

will explain this behaviour, and provide some work towards analysing why this happens

using the tools developed in this course. This option will require typically greater use of

data than a Type A assignment. You may use data from Australia, or any other country

of your choice.

In either case: Your explanation should include references to work done by others on

your economic question, and should also include appropriate real-world data. It may also

include appropriate graphs and equations. Your explanation may be of strictly narrative

form, where the phenomenon is discussed without the use of graphs or equations, and

with only reference to your own thoughts, the ideas developed in class, and relevant data.

Whatever is most appropriate for your chosen question is ideal.

Assignments of this type (particularly Type A) are sometimes called “Economic

Naturalist Writing Assignments”. Many example economic questions for this type of

assignment are available online. I encourage you to come up with your own question that

is of interest to you.

Minor Restriction: If doing a Microeconomics report, you may not do a report on

housing prices. It’s definitely an extremely interesting topic, but we do not have the kind

of tools necessary to properly analyse this problem.

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Important Details

Due Date: 5pm, 21st of May, 2021 (Canberra time)

Word Limit: 1000 words

Submission: Turnitin on Wattle

Word Processing Software: I strongly encourage you to use LATEX (or similar) to write

your assignment. Microsoft Word (or similar) is also acceptable. A LATEX template for

the assignment is provided on Wattle.

Requirements and Recommendations

You are required to:

• Choose a topic based on the description above.

• Complete an original report on your chosen topic of no more than 1000 words. A 1000 word report should be less than 5 pages, even with any pictures/graphs you

wish to include.

• Write your paper using LATEX or similar. Microsoft Word is also acceptable. [A LATEX template is available on Wattle.]

• Submit the paper on Wattle using Turnitin in pdf format by the deadline.

It is strongly recommended that you:

• Choose your topic soon. Ideally finalising your choice by the mid-semester break; especially if doing a Microeconomics assignment.

• Endeavour to choose a topic you find interesting and unique.

• Talk (briefly) to your tutor, or at the Help Desk, about your choice of topic. They will have useful comments to make.

• Use the Report Template from Wattle to structure your paper.

I encourage you to:

• Talk about your ideas with other people from class or your social circles. Bouncing ideas off others is great for clarifying your ideas.

• If you’re idea is not working out, and you have time to spare, dump it for a better one.

• Complete a draft, which can be looked at during the Help Desk times.

• Submit the work to Turnitin a little early. Particularly if you have not used Turnitin before; it can be volatile at times.

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Marking Guide

You will be graded based on a combination of the following factors:

• Quality of Analysis: How well the argument itself is developed. Includes how accurately and appropriately you have used the methods and tools developed in

class. Can be judged on Accuracy, Precision, Logical Soundness, Lack of Bias, and

Breadth and Depth of Analysis.

• Quality of Expression: How well the report is written and expressed. This is primarily concerned with the flow of argument.

• Topic Choice: The extent to which your topic choice aligns with the project description. For Type A: whether the topic is of relevance to you personally, and

which is amenable to economic analysis. For Type B: whether the topic is an

appropriate macroeconomic question, which is amenable to economic analysis.

• Use of Appropriate References: The quality and relevance of references used. For some topic choices there will be relatively few appropriate references; this is not

a problem.

• Word Limit: The Assignment must be completed using LATEX, or Microsoft Word, or similar. The word limit must not exceed 1000 words (excluding references and

reasonable footnotes).

• Referencing: References must be provided, the referencing system used must be consistent, and of sufficient detail to be able to find the references. We do not

specify which referencing system must be used.

• Proper Academic Conduct: As always, submitted assignments must be your own original material. Penalties for improper academic conduct range from a 10%

penalty on this assessment to removal from the university.

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Who benefits more from partnerships between cinemas and restaurants: the cinema or the restaurant?

Hong Seo Yeon – u6763736

19/10/18

Essay

While the facebook page of cinemas are expected to promote new movies and cinema facil-

ities, we occasionally observe it promoting nearby restaurants and cafes. The reason why

cinemas help promote these seemingly unrelated food venues are because they are, in fact,

related – through partnership contracts.

Cinemas and restaurants often form partnerships, in which the restaurants offer certain

meals bundled with cheaper movie tickets. For example, Dendy Cinema provides “Dine

with Dendy” services(Dendy Cinema Website), where Salmon N Bear – among others –

allows customers to add a Dendy’s ticket for only 10 dollars if they spend more than 25

dollars on their food. In exchange, cinemas contribute to the promotion of the restaurants

on diverse platforms, including social media. Although partnerships are established on the

basic assumption that both parties become better off, an interesting question can be raised

in this case: who benefits more, Dendy Cinema or Salmon N Bear?

Although Salmon N Bear provides movie tickets at a lower-than-regular price, the eco-

nomic benefit for Dendy Cinema exceeds the possible loss in sales revenue due to the lower

prices. This is because the diners at Salmon N Bear get to see advertisements telling them

movie tickets are available at a lower price if they spend more than 25 dollars in the restau-

rant. Even if they didn’t plan to buy movie tickets before viewing the offer, the conditional

fall in price will increase their willingness to go to the cinema, and hence the demand for

movie tickets will rise (demand curve shifts rightwards), increasing the sales revenue(price

times quantity of tickets). It is also likely that after enjoying their experiences at the cin-

ema, the diners will purchase movie tickets at normal price level, further increasing Dendy’s

sales revenue in the long run. The special offer at Salmon N Bear also gives Dendy Cinema

an edge over their competitor, Palace Cinema for instance, as tickets for Dendy’s are now

available at a lower price than the tickets for Palace Cinema. In other words, the tempo-

rary cut in price can help Dendy’s widen their long-term customer base relative to other

competitors, potentially increasing their market share.

The ticket offer is definitely also beneficial to Salmon N Bear. Diners who previously

planned to spend less than 25 dollars are now willing to spend more to gain access to cheaper

movie tickets. The increase in demand for their meal leads to an increase in revenue(price of

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each meal times quantity) for Salmon N Bear. Also, people who planned to watch films at

Dendy Cinema are now more likely to buy food at Salmon N Bear, since they can have meals

and buy cheaper movie tickets at the same time. Again, demand increases, and revenue rises.

Moreover, in the longer run, the promotion of Salmon N Bear on Dendy cinema websites

and social media pages raise awareness of the restaurant, which may increase the number of

their future customers.

Whether it is Dendy Cinema or Salmon N Bear that benefits more from their mutual

contract depends on a number of elements, of which many are neither tangible nor measur-

able. For example, even if the exact amount of Dendy’s tickets sold at Salmon N Bear is

measured, it is almost impossible to deduce what proportion of those ticket sales was derived

from the demand for cinema tickets, and what proportion was derived from the demand for

food and drinks. The long-term effects of advertisements are even more ambiguous on both

sides. In sum, the respective benefits the two parties gain from their partnership is difficult

to predict or measure separately.

Therefore, a better way of examining the benefits Cinema-Restaurant partnership brings

to the involved parties is by studying the relationship between the two. From the above

analysis, Dendy Cinema and Salmon N Bear are complements, meaning the consumption

of one is accompanied by the consumption of another. Since there are many alternative

options of consumption, the two are not very strong complements. Still, the connection

suggests that increased demand for Dendy’s results in increased demand for Salmon N

Bear, vice versa. The benefits gained by the two parties are exchanged. Hence, the cinema

and the restaurant can respectively maximise their benefits by actively contributing to their

partnership contract.

The attempt to determine who benefits more from the partnership of cinemas and restau-

rants thus leads to the conclusion that the benefits are not really separable. However, it is

clear that both parties do benefit in most cases – this is precisely why the partnerships are

maintained, between many different cinemas and restaurants.

Reference

https://www.dendy.com.au/offers/dine-with-dendy-newtown

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QUESTION: Why do swimming teachers in Sydney get paid more than those in Canberra?

Personal experience has allowed me to compare the hourly rate of swimming teachers in Sydney and Canberra. Working for a Government run pool in Sydney I received 32.50 an hour, whereas my current work only pays 19.60 an hour, despite the fact that I am incredibly more experienced now than I was during my Sydney job. The reasons behind this have always interested (and granted, frustrated) me, and I am excited to delve into the possible economic explanations behind this question. Some areas which I seek to examine are externalities, government subsidies, inelastic/elastic demand, supply and demand, and labour markets.

It is important to note that employing labour is seen as a ‘necessary evil’ (Taylor, 2018); a cost firms would rather avoid but require to make a profit. Therefore, firms are going to pay their workers as little as possible in order to maximise profit. Price floors in the form of minimum wages ensure that workers are paid appropriately. In both places Governments have minimum wages in place. The minimum wage implemented is affected by the firms’ revenue, the elasticity of demand, the employee’s willingness to work, the general demand and the extent of the externality.

The obvious reason behind the pay gap is the concept of demand. If there are more people willing to purchase the good, the demand curve shifts out, pushing both the price and quantity up. This simultaneously increases labour demanded by firms and the wages they can pay. Due to the size of Sydney’s population, which is considerably larger than Canberra’s, the demand for swimming lessons is higher. Moreover, the weather and proximity to the ocean both push demand up in Sydney (this will be discussed in depth later on). As the labour market graph represents, wages and labour demanded are both driven up when demand increases, accounting for the lower wage rates in Canberra.

https://scontent.fcbr1-1.fna.fbcdn.net/v/t1.15752-9/44157342_1890561311058932_4056285243122909184_n.jpg?_nc_cat=104&oh=5be704f8c5b44b391d6e4d7e355af8e3&oe=5C4D6B86The elasticity of demand gives insight into the possible wage difference Canberra and Sydney swimming instructors are subjected to. Sydney pools have a relatively inelastic demand in comparison to Canberra pools (Khan Academy). This is due to the weather conditions and location. Sydney is situated right on the coast, and as such swimming is viewed as an invaluable skill. This means the market demand is relatively inelastic to price. Conversely, Canberra is two or so hours inland with little places to swim, meaning learning how to swim is not as much of a priority and thus the price is more sensitive to other factors at play. One of these factors is the colder weather conditions of Canberra. Canberra winters are far colder than Sydney Winters, which makes the act of getting wet unpleasant, and due to the elasticity of demand Canberra pools have, willingness to pay decreases. Therefore, prices must be set at a lower price for people to consume the good. If prices are set at a lower price, overall profit for the firm decreases.

Moreover, Sydney swimming lessons are run by the government and therefore heavily subsidised due to their large positive externality. A positive externality is any benefit enjoyed by a third party to the economic transaction (Economics Online). Evidently, both Canberra and Sydney pools result in positive externalities, as children who know how to swim are less likely to drown – a big issue in Australia (Royal Life Saving , 2018). Similarly, Canberra lessons are subsidised but only through the school program which runs at a single firm (The Canberra Times, 2016), creating a kind of monopoly. Because all the government subsidy is concentrated in one area (the AIS), other firms, in order to be competitive, must take the lower price set by the market. This means that wages are generally lower in Canberra than Sydney which distributes its subsidies evenly.

Another possible reason for the wage gap is the demographic and how this affects individuals’ willingness to work. Canberra pools primarily employ university students (at my swimming centre 36 out of the 45 swimming teachers are university students or young people). This kind of statistic is fairly common in Canberra pools. Conversely, Sydney has an older demographic and therefore have a higher percentage of older workers (Australian Bureau of Statistics, 2018). Generally, university students are willing to work for fair less than older individuals, due to reasons including their lack of experience and limited types of jobs they are employable for. This pushes the minimum wage down in Canberra, accounting for the pay gap between Sydney and Canberra.

Thus, numerous factors must be considered when determining the reason behind the wage gap for swimming teachers in Sydney and Canberra. By viewing the situation economically and analysing concepts such as price elasticity, government subsidies, willingness to pay and positive externalities, we gain a better understanding of the mechanisms creating this price gap.

Word Count: 785

References

Hardy, Karen. ‘School Swimming Lessons on the fall in ACT.’ The Canberra Times, 2016. https://www.canberratimes.com.au/national/act/school-swimming-lessons-on-the-fall-in-act-20161207-gt5whf.html

Burgess, Katie. ‘It’s about to get more expensive to go to a public pool in Canberra.’ The Canberra Times, 2018. https://www.canberratimes.com.au/national/act/its-about-to-get-more-expensive-to-go-to-a-public-pool-in-canberra-20180108-h0f26m.html

Khan, Sal. ‘Price elasticity of demand.’ Khan Academy, 2012. https://www.khanacademy.org/economics-finance-domain/microeconomics/elasticity-tutorial/price-elasticity-tutorial/v/price-elasticity-of-demand

‘Positive Externalities.’ Economics Online. http://www.economicsonline.co.uk/Market_failures/Positive_externalities.html

‘Regional Population by Age and Sex, Australia, 2017.’ Australian Bureau of Statistics, 2018. http://www.abs.gov.au/ausstats/[email protected]/mf/3235.0

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