MLF1002

INDIVIDUAL Economics Assessment 2 – 30%

Due: Friday of Week 9

PART 1 – 15%
Capitalism and Income Inequality

Preparation:

 Click here https://www.imf.org/external/pubs/ft/fandd/basics/2_capitalism.htm for a short,

simple, and well-explained article on Capitalism.

 Click here https://www.economicshelp.org/blog/2935/economics/inequality-and-capitalism/ for a

short & simple article on Inequality.

 Accessing other on-line sources is also necessary

Requirements:

Former and current Socialist countries like China, Vietnam, Poland, Estonia, Slovakia and Albania all
experienced strong economic growth (by GDP) within 20-30 years as they transitioned to a market
economy (i.e., Capitalism).

3 major features (or pillars) of Capitalism include Private Property, Market Economy, and the Firm’s Profit
Motive – and other related features.

A. Explain at least 5 major features of Capitalism by contrasting them with the Socialist system.
Complement your explanation with examples from one or some of the above mentioned countries.

[10 marks for quality of explanation & examples. About 500 words]

B. Identify and explain at least 2 reasons why Income Inequality is an acceptable & necessary outcome
of a Capitalist system. Some examples would be helpful.

[5 marks for quality of explanation & examples. About 200-300 words]

Referencing Requirements
Chicago 17th B Author-Date Referencing Guide to acknowledge your sources of information (both in-text
and as a reference list at the end).

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PART 2 – 15%

Electric Bicycles (e-bikes)

https://www.statista.com/statistics/674381/size-global-market-electric-bicycles/

Preparation

 Click here https://thefifthestate.com.au/home-and-lifestyle/consumers/wheelie-popular-e-bikes-

take-charge-of-the-roads/ for some useful information about the growth of e-bikes globally and in
Australia.

 And another one https://www.theguardian.com/lifeandstyle/2019/nov/06/e-bike-surge-in-

popularity-in-australian-cities-but-experts-warn-of-risks

 Accessing other on-line sources is also required.

Requirements:

The e-bike market in Australia is divided into two segments, i.e., the commuter segment (primarily riding to
and from work/school on a regular basis) and the leisure segment (mainly for recreation, exercise, etc.).

Using your understanding of the relevant Economics concepts, research into e-bikes and personal
experience to:

C. Draw a diagram showing the starting Demand Curve (D1) of e-bikes in Australia. You may assume
an equilibrium point of P=$2000, and Q=50,000 units/year.

1. Identify and explain at least 5 major factors that can affect the demand for e-bikes in Australia.
Include both positive and negative factors.
[10 marks for quality of explanation. About 500 words]

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 2. Show the impact of these factors on the diagram
[3 marks for quality & accuracy of diagram]

3. If the average Price of e-bikes bought by commuters increased by 20% and Quantity
demanded fell by 5%, calculate the price elasticity of demand (PED).
Explain with reasons why commuter e-bikes would have an elastic or inelastic demand.

If the average Price of e-bikes used for leisure increased 20% and Quantity demanded fell by
30%, calculate the price elasticity of demand (PED)
Explain with reasons why leisure e-bikes would have an elastic or inelastic demand

[2 marks for quality of explanation. About 100 words]

Referencing Requirements
Chicago 17th B Author-Date Referencing Guide to acknowledge your sources of information (both in-text
and as a reference list at the end).

End of Assessment