Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Economic Principles (ECO10001)
Case Study Assignment
Instructions to students
Due date: Please submit your completed work by Sunday, 11:59pm at the end of Week 4.
Form of submission: Please submit on Canvas via “Assignments”.
Document type for submission: Microsoft Word.
Assignment format: The Case Study Assignment involves answering 4 questions, beginning
from the next page.
The case study assignment is to be completed individually.
The case study assignment is worth 20 marks.
Please take note of the following:
− There is NO need to provide references in your answers.
− Feel free to consult various sources (e.g., the textbook, newspapers, the internet, etc)
to help with composing your answers.
− You must NOT copy and paste verbatim from those sources. You must paraphrase,
using your own language.
− Straight copying and pasting will be caught for plagiarism. Students who are detected
of plagiarism will be subject to serious academic consequences.
− You are welcome to discuss the questions with each other. Again, you must make sure
to compose answers in your own language.
− Students submitting the same work will also be held liable for plagiarism.
− For questions that involve drawing graphs, please feel free to draw your graphs with
pen and paper, take a photo, then insert the photo into your answer document.
− Please do not copy the questions in your answers as it will trigger plagiarism
detection.
− Please sign the assignment coversheet to declare that your answers are your own
work.
Please find the 4 questions below, starting from page number 2.
Page 1|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Question 1
The photo above went viral in May, 2022. It shows a large amount of perfectly good
avocados being left to rot in northern Queensland.
This case study will shed some light on the story behind this staggering photo.
The lion share of avocado in Australia are grown in two states: Queensland and Western
Australia. Due to climatic differences, the major season for avocado in Western Australia
traditionally runs from August to February, whereas Queensland typically dominates the
market for the rest of the year.
However, late 2021 and early 2022 witnesses a much better than expected season for avocado
grown in Western Australia. Growers WA continued to harvest and supply their produce to
the nationwide market well into April and May.
This shock led to the market being flooded with a huge amount of avocados in early May,
2022.
Requirements are on the next page.
Page 2|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Required:
a. Clearly explain in your own words the impact of the shock described above (i.e.,
better than expected season in Western Australia) on the demand and supply in the
market of avocado in Australia.
Point out the relevant determinant of demand and/or supply in this scenario.
(1 + 1 = 2 marks)
b. Draw an appropriate demand – supply graph to illustrate the impact of this shock on
the market of avocado in Australia
(2 marks)
c. Why did avocado farmers in Queensland choose to dump their output, instead of
trying to sell them?
Use relevant economic concepts covered in the first 3 topics of this unit to support
your explanation.
(Note: You will NOT be awarded any mark if you attempt to explain, using common
sense without including a certain economic concept).
(1 marks)
(2 + 2 + 1 = 5 marks)
Page 3|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Question 2
Above is another photo that took the internet by storm in early June 2022.
It depicted the surge in wholesale electricity prices in Australia in late May and early June
this year.
At one point, wholesale prices for electricity topped $750 per megawatt hour (MWh). To put
this incredible spike in perspective, prices at the end of 2021 stood at only $65 per MWh.
This case study will help you make sense of the dramatic development within the electricity
market over the past few months.
All the drama could be summarised by the following two shocks:
i.
While Australia remains largely dependent on coal for electricity generation, we are
currently operating an ageing fleet of coal fired generators, which have grown
increasingly unstable and are subject to frequent outages.
During May and early June, an average of 25% of our coal-fired capacity was out of
service
ii.
Australia’s east coast faced the coldest start to winter in decades. In Melbourne, for
example, it has not been this cold in June since 1949.
As a result, electricity consumption soared.
Requirements are on the next page.
Page 4|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Required:
a. Draw an appropriate demand/supply graph in order to illustrate the impacts of the
shocks above on the market for wholesale electricity in Australia.
(Note: You only need to complete the graph. No explanation is needed).
(2 marks)
b. With Australia on the brink of an energy crisis, the Australian Energy Market
Operator (AEMO) had to intervene.
(The AEMO is a governmental body, established to oversee the energy market in
Australia).
The AEMO moved to impose a price cap/price ceiling of $300 per MWh in the
wholesale electricity market.
Clearly explain what would happen in the wholesale electricity market after the price
cap above was introduced.
Support your answer with an appropriate demand/supply graph.
(1 + 1 = 2 marks)
c. In your opinion, what should the government do in order to save the country from
descending in an energy crisis and ensure sufficient electricity supply across Australia
throughout the 2022 winter?
(1 mark)
(2 + 2 + 1 = 5 marks)
Page 5|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Question 3
a. Ethan runs a sushi train place on Glenferrie Road, near Swinburne. His usual price
was $4.5 per one sushi dish. He would normally sell 225 dishes per day.
Last month, Ethan decided to lower his price down to $3 per one sushi dish. He kept
track of his sales closely and noticed that sales rose to 400 dishes per day.
Calculate the price elasticity of demand for Ethan’s sushi. Make sure to show your
calculations in detail.
(2 marks)
b. Based on the result of your calculation in part 1, clearly explain whether the demand
for Ethan’s sushi is elastic or inelastic.
(1 mark)
c. Anna runs a highly popular milk tea place near Swinburne. Her signature cup “Milk
foam with Oolong tea” is a smash hit among Swinburne students.
Anna was so confident about the popularity of her milk tea that she moved to raise the
price by 20% last month.
Anna then noticed that her daily revenue increased by exactly 20% after the price
hike.
Given the information above, what can you say about the price elasticity of demand
for Anna’s milk tea. Clearly explain your answer.
(2 marks)
(2 + 1 + 2 = 5 marks)
Page 6|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Question 4
You are seeing above a photo of mine at the Winter Night Market.
The Winter Night Market is held every Wednesday from June to August each year at Queen
Victoria Market.
I was standing in front of a kiosk called “Son In Law”, the only stall that sells cotton candy.
There was a huge line behind me as cotton candy is enormously popular among little kids and
dating couples.
(The act of eating a cotton candy must have been considered cute and helped increase one’s
attractiveness. Just guessing...)
When I first visited in early June, a cotton candy was selling for $10. Upon my return last
week, I realised the price had been jacked up to $12.
Requirements are on the next page.
Page 7|8
Swinburne College
Economic Principles (ECO10001)
Case Study Assignment
Required:
a. Using the concept of elasticity, explain why the owner of “Son In Law” decided to
raise the price for their cotton candy.
Predict what would happen to their revenue following the price hike.
(1 + 1 = 2 marks)
b. On the same graph, draw the following demand curves
− The demand curve for Ethan’s sushi (from Question 3)
− The demand curve for Anna’s milk tea (from Question 3)
− The demand curve for Son In Law’s cotton candy (from Question 4)
(Note: This question only asks for the demand curves. You do not need to draw a
supply curve on your graph).
(1 + 1 + 1 = 3 marks)
(2 + 3 = 5 marks)
Page 8|8