Microeconomics: Bangrian tea prices

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Briefing Your assignment should consider the relevant theoretical points raised in the lectures and the seminars.. Your diagrams must be properly labelled and explained; unexplained diagrams will be disregarded. The reading provided in the lecture hand-outs may be complemented by extra material. However, internet sources will not be accepted as a legitimate reference unless they are respectable academic journals. Please note that this is an individual piece of work and thus you must consult the relevant section of the Module Guide regarding plagiarism and syndication. Assessment Criteria -Knowledge & understanding of the theory & the principles involved -Identification of key issues and constructing theoretical frameworks for analysis -Ability to argue coherently and consistently -Evidence of wider reading -Ability to articulate and present theoretical knowledge and information effectively this is for 2nd year university. Task Assignment (50%) This assignment is in two parts. The first part has a weighting of 40% of the assignment mark and the second part 60%. Part One The diagram below shows how the price of tea in Bangria has changed over time. Bangrian tea prices . 1) Describe the trend in the Bangrian tea price between 1965 and 2005. . 2) There was a drought in Bangria in 1975 (and again in1985). Using simple demand (D) and supply (S) diagrams, analyse the impact of such an event, ceteris paribus, on the equilibrium price (hint: look at what happened to it in those years in the graph) and quantity of tea in Bangria in the short, medium and long terms. 1) Diana faces a choice between the amount to spend on university education and the amount to spend on other goods, given her preferences and fixed income. Using the standard indifference curve analysis, explain how she reaches an equilibrium in terms of maximising her satisfaction. 2) Assume that she is offered a scholarship for the amount of education that she wants to choose. Analyse the impact of this on her choice ceteris paribus. 3) Would she be better off if she were given the cash equivalent of the scholarship?
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