Advice on Generative Artificial Intelligence use and Academic Integrity

Generative AI tools cannot be used in this assessment task.

In this assessment, you must not use generative artificial intelligence (AI) to generate any materials or content in relation to the assessment task. Any use would constitute a breach of academic integrity.

Question 1: 10 marks

Suppose you are a plumber and run a drain unblocking business. Assume you have fixed costs for the business of $5000 per week - this could be the cost of an office or storage facility and all the equipment and vehicles. The business can hire plumbers to unblock drains for $4000 per plumber per week. The below table shows how the number of drains unblocked per week varies with the number of plumbers hired by the business.

Labour (plumbers per week)	Drains cleared (per week)
0	0
1	30
2	55
3	75
4	85
5	90

Assume that the only variable cost is labour or plumbers.

a) Calculate the marginal cost of unblocking drains at 30, 55, 75, 85 and 90 drains per week. Along with marginal cost at each output level, you should present fixed, variable, total costs and average fixed, average variable and average total costs. (Hint: it is a good idea to expand the table to present your results). (4 marks)

b) Suppose the current price for unblocking drains is $400 per drain. How many plumbers should your business employ and how many drains should they unblock per week in total? Briefly explain your choice. How much profit will your business make? (3 marks)c) Suppose the market wage for plumbers rises to $6000 but the price of drain cleaning remains unchanged at $400 per drain. Explain based on your cost structure how many plumbers your business should now employ and how many drains they should unblock per week in total, given the new higher market wage for plumbers. How much profit will the business make at this output? (3 marks)

Question 2: 10 marks

Consider an example of a firm with a total cost curve given by

a. Based on this total cost function, provide expressions for the firm's fixed cost, total variable cost, average total cost, average variable cost and marginal cost. (4 marks)b. Using your knowledge of the behaviour of cost curves, find the output level that minimizes the firm's average total cost.(3 marks)c. Now solve for the output level that minimizes average variable cost. (3 marks)

Question 3: 10 marks

During the pandemic, used car prices increased dramatically. Your task is to apply economic concepts and theories to give an economic explanation of the dramatic increase in used car prices. (Hint: you are encouraged to use diagrams to illustrate your answers. This is an economics assignment so whatever you find out about events, you must frame in economics terms like supply and demand and producer behaviour.)

a) Do some online research into what happened on the supply side in the market for cars (new and used) in Australia during the pandemic. Give an explanation of what you understand to have happened to the supply of new cars and used cars, use diagrams if appropriate. (Hint: remember new car and used car markets are separate markets) (3 marks)

b) Your research should extend to what happened on the demand side in the market for cars in Australia during the pandemic. Provide an explanation for what might have happened to demand for used cars, use diagrams if appropriate. (Hint: If you have illustrated what happened to supply of new and used cars, think about demand for new and used cars too.)(3 marks)

c) Some people might argue that the problem with the Australian car market is that we do not manufacture cars in Australia anymore and that if we had a local car industry, the increase in used car prices might not have eventuated. Think about why there was a shortage of new cars in Australia at the time and explain whether you agree or disagree with the statement that used car prices would not have risen if we had a local car industry.(4marks)