ASSESSMENT EXEMPLAR WITH GUIDE FOR INSTRUCTORS:
CONSUMER THEORY
Topic:
☒Microeconomics
☐Macroeconomics
☐Statistics/Econometrics
Learning domains:
☒Knowledge
☒Application
☐Data analysis
☒Communication
☐Reflection
Core concepts:
Consumer theory, Income and
substitution effects, Impacts of taxation,
Policy analysis.
Type(s) of task (can be more than one)
☒Constructed response given stimulus material
(clip/narrative/etc.)
☐Constructed response with no stimulus material
☐Quantitative analysis
☐Independent data sourcing
☐Independent research (not data sourcing)
☒Written presentation
☐Oral presentation
☐Group collaboration
☐Use of nominated maths/stats software (specify):
☐Use of other technology (specify):
☐Other (specify):
________________________________________
This assessment is about consumer theory and is designed to assess theoretical
understanding. It is designed for intermediate microeconomics level students. The
development of conceptual understanding of how consumers make decisions, while theoretical,
is fundamental to understanding the trade-offs made in everyday decision-making. Although set
in the context of government revenue, the emphasis of the assignment is the impact of policy on
individual choice rather than government finances.
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Bachelors level task
Individual written assignment
Approx 1500 words
Assuming you are employed by the Department of Treasury and the Commonwealth government
is seeking ways to improve the Federal budget situation which is in deficit. Two different policy
options are being considered:
Policy option 1: Increasing marginal income tax rates.
Policy option 2: Increasing the goods and services consumption tax (GST) but leaving food
exempt from the GST.
You are required to write a report which analyses the likely in principle impacts on consumers of
the two policy changes. In your report
i)
Initially assume that households purchase two types of goods: GST exempt “Food”, and
GST taxed “Other goods”. Compare how each of the two policy options would impact on
household consumption choices assuming both categories of goods are normal goods.
[KB1, AB1]
ii)
Illustrate the likely impact of the two policy options on household consumption choices if it
is assumed that lower income households spend a higher proportion of their income on
food and consider food to be an inferior good. [KB1, AB2]
iii)
Assuming both policies raised similar levels of revenue, explain which policy you
would recommend and why? [To avoid unnecessary complication in your answer
assume revenue from both policy options goes to the Commonwealth Government.]
[AB2, CB1]
2
Masters level task
Individual written assignment
Approx. 1500 words
Assuming you are employed by the Department of Treasury and the Commonwealth government
is seeking ways to improve the Federal budget situation which is in deficit. Three different policy
options are being considered:
Policy option 1: Increasing marginal income tax rates.
Policy option 2: Increasing the goods and services consumption tax (GST) but leaving food
exempt from the GST.
Policy option 3: Broadening the GST to include all goods and services without exception
You are required to write a report which analyses the likely in principle impacts on consumers of
the three policy changes. In your report
i)
Initially assume that households purchase two types of goods: GST exempt “Food”, and
GST taxed “Other goods”. Compare how each of the policy options would impact on
household consumption choices assuming both categories of goods are normal goods.
[KM1, AM1]
ii)
Illustrate the likely impact of the policy options on household consumption choices if it is
assumed that lower income households spend a higher proportion of their income on food
and consider food to be an inferior good. [KM1, AM2]
iii)
Assuming the policies raised similar levels of revenue, explain which policy you
would recommend and why? [To avoid unnecessary complication in your answer
assume revenue from all policy options goes to the Commonwealth Government.]
[AM2, CM1]
Advice to assessors:
This assessment task is technical and it is expected that students will be able to disaggregate
consumption choices and discuss income and substitution effects. The task could be extended to
include increases in transfer payments to low income household designed to offset the tax effects.
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Learning
domain
Learning outcomes
Bachelor Degree
Masters Degree
Knowledge
KB1 Bachelor graduates will be able to
identify, coherently explain and synthesise
core economic concepts
KM1 Masters graduates will be able to
identify, coherently explain and synthesise
core and advanced economic concepts,
including recent developments in the
discipline
Application
Bachelor graduates will be able to:
Masters graduates will be able to:
AB1• frame problems in terms of core
economic concepts and principles
AM1• frame and critically analyse problems in
terms of core and advanced economic
concepts and principles
AB2• apply economic reasoning and
analytical skills, in order to make informed
judgments and decisions
AM2• apply advanced economic reasoning
and analytical skills, including quantitative
techniques where appropriate, in order to
make informed judgments and decisions
AM3• plan and execute a research-based
project
Data analysis
Bachelor graduates will be:
Masters graduates will be able to:
DB1• able to use economic data to address
typical problems faced by economists
DM1• select and apply an appropriate
empirical method to address typical problems
faced by economists
DB2• aware of, and able to implement,
basic empirical techniques and interpret the
results
DM2• critically evaluate the results
Communication CB1 Bachelor graduates will be able to
present a clear and coherent exposition of
economic knowledge, ideas and empirical
evidence both orally and in writing,
individually or in collaborative contexts
CM1 Masters graduates will be able to
communicate complex ideas clearly and
coherently, in written form and interactive oral
form to expert and non-expert audiences,
individually or in collaborative contexts
Reflection
Bachelor graduates will be able to reflect
on:
Masters graduates will be able to reflect on
and evaluate:
RB1• the nature and implications of
assumptions and value judgments in
economic analysis and policy
RM1• the nature and implications of
assumptions and value judgments in
economic analysis and policy
RB2• interactions between economic
thinking and economic events, both
historical and contemporary
RM2• interactions between economic thinking
and economic events, both historical and
contemporary
RB3• the responsibilities of economists and
their role in society
RM3• the responsibilities of economists and
their role in society
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