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Quantitative methods of Economics
Quantitative methods of Economics
MAT10706 QUANTITATIVE METHODS WITH ECONOMICS
ASSIGNMENT 1
| Due | Week 7 midnight Sunday |
| Value | 30% |
| Topics | 1 to 6 |
Please follow these guidelines for the assignment
- The assignment must be submitted online as a SINGLE Word file with Excel output copied and pasted (use paste special -> Excel object).
- All submissions should be typed including the mathematics in A4 page size
- All written descriptions must be in correctly structured sentences using appropriate mathematical, business, and English language.
- Descriptions should be in formal language (e.g. third person – no use of I or me throughout)
- Figures and tables must be fully labelled and include titles
With the exception of XXXXX, you are not required to find any other references to use in this assignment. All the information you need is given in the question or in your study material.
However, if you happen to use other resources, ensure that they are referenced using Harvard conventions.
All submitted work must be your own. Using others’ work as if it is your own can be deemed to be plagiarism.
Remember your assignment must be submitted online in a single word file.
| W’ght in % | Criterion | Excellent (HD) | Very Good (D) | Good (C) | Satisfactory (P) | Unsatisfactory (F) | Not Present |
| 40 | Calculations· Relevant to question
· Accurate · Correctly set out · Appropriate rounding includes units with measurements. |
The calculations are highly related to the task; Excellent calculations with high level of mathematical setting out, rounding and measurements | The calculations are closely related to the task; Advanced calculations, advanced setting out, rounding, and measurements. | The calculations are related to the task; Competent calculations; competent setting out; rounding, and measurements | The calculations are partially related to the task; Adequate calculations with some errors, basic setting out, rounding and measurements. | The calculations are not related to the task; Calculations are incorrect. Poor mathematical setting out, rounding, and measurements. | Calculations are absent. |
| 25 | Use of Excel· Correct tables
· Correct graphs · Graphs relevant to the question · Graphs fully labelled |
Highly advanced use of excel to draw graphs, graphs are fully labelled and relevant to the question. | Advanced use of Excel to draw graphs, graphs are fully labelled with minor errors and relevant to the question. | Effective use of Excel to draw graphs, graphs are labelled with some errors and relevant to the question. | Basic use of Excel to draw graphs, graphs are partially labelled and partially relevant to the question. | Poor use of Excel to draw graphs, graphs have no relevant labels and are not relevant to the question. | No graphs. |
| 15 | Communication· Effective and relevant
· Logically sequenced · Appropriate structure · Use of mathematical, business, and English language |
Exemplary logic, structure, and use of mathematical, business and English language | Advanced logic, structure, and use of mathematical, business, and English language. | Effective logic, structure, and use of mathematical, business, and English language | Satisfactory logic, structure and use of mathematical, business, and English language | Unsatisfactory logic, structure, and use of mathematical, business, and English language. | No logic or structure; Little use of mathematical, business, and English language. |
| 20 | Conclusion· Clear and relevant concluding statement
· Assumptions |
Clear statement of conclusion with all questions answered appropriately; excellent statement of assumptions and limitations | Statement of conclusion with majority of questions answered appropriately; very clear statement of assumptions and limitations | Statement of conclusion with questions answered appropriately; clear statement of assumptions and limitations. | Basic statement of conclusion with some questions answered appropriately; sound statement of assumptions and limitations. | Statement of conclusion not relevant to the task. Assumptions included but not relevant. |
No conclusion present. |
Question 1 Costs associated with studying at university.
Australian domestic students acquire debt when they study at university. They do not pay for their units upfront, instead repaying the cost of their study when their income exceeds $54,126 p.a.
(for more info see http://studyassist.gov.au/sites/studyassist/payingbackmyloan/loan-repayment/pages/loan-repayment).
Task
Investigate and report on the cost of a degree
Domestic Student Fees for SCU College can be found in the table below:
| Course Name | Fees (2015 per unit) | Fees (2016 per unit) |
| Diploma of Business | $1,740 | $1,830 |
| Diploma of Science | N/A | $2,720 |
| Associate Degree in Health | $1,830 | $2,650 |
| Associate Degree in Arts | $2,110 | $2,180 |
| Associate Degree in Business | $1,740 | $1,830 |
| Associate Degree in Science | $2,590 | $2,720 |
| Bachelor of Contemporary Studies | N/A | $2,430 |
Other SCU units can be found at: http://scu.edu.au/students/index.php/64
Steps to complete to undertake the investigation
- Assuming fees increase each year according to the CPI (Consumer Price Index – see Appendix 1 for CPI from 2006 to 2015) determine the cost of fees each year for the remainder of your degree. Note: CPI varies each year so you will need to make a guess at what CPI will be in future – as long as your answer is reasonable it is correct!
- Use your calculations and the results in the table above to calculate the cost of a entire degree or diploma.
- Assuming you earn between $54,126 and $60,292 you will be required to pay back 4% of your uni debt each year. How much will your first payment be?
- Assuming your salary does not increase above $60,292, and taking into account the amount you have repaid PLUS the CPI adjustment on the remainder, how much will you be required to pay back in the second year?
- Conclusion (maximum of one page and 300 words) briefly in two or three paragraphs. You need to:
- Introduce the figures you have obtained
- Present the results of your calculations in an understandable and non-mathematical way, without unnecessary mathematical jargon and equations
- The conclusion should be written as a note you file with your financial papers.
- Note any assumptions you have made and how these might impact on your findings
Question 2 Changes to the GST
There has been talk about changing the GST in Australia from 10% to 15%. Your task is to investigate the effect on this on supply and demand on a particular product and write a recommendation about the implementation of a 15% GST.
See the following for an explanation on how GST works https://www.ato.gov.au/uploadedFiles/Content/ITX/downloads/how_gst_works.pdf
The supply and demand equations for a product are given by:
Where q is the number of items (in thousands); p is the market price in dollars; and a and b are the coefficients to be chosen – see below.
Task
As a consultant you have been asked to explore and report on the consequence of raising the GST from 10% to 15%.
Steps taken to complete the investigation
- Clearly state the values for a and b you have chosen (Use the Excel random function =Ran() or the RANDOM key on your calculator to obtain two random numbers between 1 and 9 inclusive rounded to 1 decimal place).
- Use algebra to determine the equilibrium price and quantity prior to the changes in GST.
- Update the supply equation to include 15% GST. Assume the existing supply equation includes 10% GST.
- Use algebra to find the new equilibrium price and quantity (i.e. after the change in GST)
- Use Excel to graph, on the same set of axes, the original supply and demand equations and the updated supply equation with the cash-back.
- Use your results to complete the summary table below. Round answers to two decimal places
| Before change in GST | After change in GST | |
| Equilibrium quantity | ||
| Equilibrium price | ||
| Total Revenue (TR) | ||
| Change in TR |
- Summarise your findings in 200-300 words, ensuring you have a clear conclusion and have stated any assumptions you have made. The conclusion should include the following:
- Discuss the effect an increase in GST to 15% will have on price, quantity and revenue
- Include and refer to your graph and summary table
- Present the results of your calculations in an understandable and nonmathematical way, without unnecessary mathematical jargon and equations.
- Discuss how the increase in GST will alter the demand curve
- Note any assumptions you have made and how these might impact on your findings
Appendix 1
Consumer Price Index
Assume that the CPI and cost of the unit changes at the start of each year.
| Year | Indexation Rate |
| 2010 | 1.9% |
| 2011 | 3.0% |
| 2012 | 2.9% |
| 2013 | 2.0% |
| 2014 | 2.6% |
| 2015 | 2.1% |
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