MPE781 – Economics for Managers

Description 

The assignment provides you with an opportunity to conduct research on/analyse problems related  to a contemporary economics issue: International Freight Assistance Mechanism, a temporary  measure to help restore critical global supply chains which have been impacted by COVID-19 by the  Australian Government. You will need to apply the existing economic theories to develop a  consistent argument with good reasoning while evaluating the given problem set critically. Please  attempt so that your writing is of high quality and professionally presented, and that it can easily be understood by the general audience, not just economists. 

Specific Requirements  

Your assignment submission should start with a cover page in which all of the following information should be provided: your full name, student ID and the total word count. Please note that the followings  are excluded from the word count: cover page, footnotes, references, tables, figures and appendix (if  any). 

Following the cover page, please provide your answers to the following four questions. Note that all of  these questions are compulsory. Please make sure you are familiar with the assignment marking rubrics  (the last page on this document) prior to answering these questions. 

Question 1: (10 marks) 

In your own words, summarize the key developments of the International Freight Assistance Mechanism (IFAM) in Australia, started in April 2020. In particular, please explain the rationales behind IFAM (or the  program), the amount of money that has been committed by the Australian Government to the program to  date (i.e., to around August/September 2021) and on which area(s), how the program works and how long the  Australian Government intends to run this program. 

Much of the information you need can be found in the Austrade’s website - the following link is a good starting  point: 

https://www.austrade.gov.au/news/news/international-freight-assistance-mechanism 

It is highly recommended that you undertake some research to gather information supporting your claims  outside the Austrade’s website; for instance, some facts on the effects of COVID-19 on Australian businesses  would help formulate your argument regarding the rationales behind IFAM. 

Question 2: (10 marks) 

Suppose that the products subject to IFAM’s support are all sold in an international (world) market and that  the market for them was perfectly competitive before the starting of the COVID-19 pandemic (pre-COVID). 

1. a) Do you think that the Australian business firms who have participated in this market for a long time were  all able to make a strictly positive economic profit pre-COVID? Explain your answer with the help of a graph. 
2. b) Now consider the effects of COVID-19 pandemic on the Australian business firms as above. Specifically,  assume that the demand for Australian products in the international markets remains the same, but that  COVID-19 pandemic resulted in a global supply chain disruption due to higher freight costs and less flights availability. Using a graph, explain these effects of COVID-19 on the output choices and profitability of the  Australian business firms (including potential firm entry and exit, if any). 
3. c) If the IFAM program helps to lower the marginal cost of production for the Australian business firms, using  a graph, explain what would happen in equilibrium regarding firm entry and exit when firms receive the IFAM  supports. 

Question 3: (10 marks) 

Now, consider an Australian business firm who is a monopolist in the international market for is unique  product.  

1. a) Using a graph, explain the effects of COVID-19 pandemic on the output choice and profitability of this  Australian business firm (suppose that COVID-19 pandemic does not alter the demand side of the market but, as in Question 2, it increases the marginal cost of production for this Australian business firm).  
2. b) If the IFAM program helps to lower the marginal cost of production for this Australian business firm, using  a graph, explain what would happen to this business firm with regard to its output choice and profitability  when it receives the IFAM supports. 

Question 4: (10 marks) 

Find a country in the world other than Australia that has implemented a similar support program/mechanism to IFAM. Give a brief description about that program/mechanism and provide one policy recommendation  based on that example which you would recommend to the Australian government to improve the efficiency  of the IFAM program. In case there is no useful recommendation from the example, please provide your own  recommendation based on your understanding of the IFAM’s development. [Hint: (i) the example of  program/mechanism that you are to provide does not have to be air freight related; it can be any policy  support for business firms to export their products during the COVID-19 pandemic and (ii) the policy  recommendation can be anything you find relevant, so long as you can provide the (economic) rationales  behind your recommendations.] 

Learning Outcomes 

The assignment allows you to demonstrate achievement towards the unit learning outcomes. The ULOs are  aligned with specific graduate learning outcomes – that is, the skills and knowledge graduates are expected  to have upon completion of their studies – and this assessment task is an important tool in determining  achievement of those outcomes.  

If you do not demonstrate achievement of the unit learning outcomes, you will not be successful in this unit.  

It is good practice to familiarise yourself with the ULOs and GLOs as they provide guidance on the  knowledge, understanding and skills you’re expected to demonstrate upon completion of the unit. In this  way they can be used to guide your study.

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Submission 

You are to submit your assignment in the individual Assignment Dropbox in the MPE781 CloudDeakin unit  site on or before the due date. 

When uploading your assignment, name your document using the following syntax: <your surname_your  first name_your Deakin student ID number_[unitcode].doc (or ‘.docx’). For example,  ‘Jones_Barry_123456789_MPE781.doc’.  

Submitting a hard copy of this assignment is not required. 

You must keep a backup copy of every assignment you submit, until the marked assignment has been returned  to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup  copy. 

Any work you submit may be checked by electronic or other means for the purposes of detecting collusion  and/or plagiarism. 

When you submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin  email address confirming that it has been submitted. You should check that you can see your assignment in  the Submissions view of the Assignment Dropbox folder after upload, and check for, and keep, the email  receipt for the submission.