BLAW1002 S2 2024 – EPA Brief

A. Context and Overview

‘Assessment 2’ is the Economics Principles Analysis (EPA), worth 30% of the final mark. The EPA is a ‘take-home’ activity, consisting of a set of tasks to do.

This EPA assesses the Economics Topics E1 (Module 6) and E2 (Module 7). You will have up to eighteen (18) days to complete the EPA on your own.

Timeline of EPA-specific events (local time in year 2024AD):

1.   Assessment brief available on Blackboard (Bb): 9th September, 9pm.

2. Submit to Turnitin by the official due date: 27th September, 11:59pm.

3.   ETA of marks/feedback on your EPA in Grade Centre is by 18th October, 9pm.

Key assessment information:

EPA consists of three compulsory questions: Q1 - 10 marks; Q2 - 15 marks; Q3 - 5 marks.

For supporting info on EPA, refer to following PDFs, available in Assessments tab on Bb:

1) EPA Brief S2 2024 [this document]

2) Marking Guidance and FAQs for EPA S2 2024

Your answers need to be typed, but diagrams must be hand-drawn (digital inking using a stylus is fine) and included in the Word document or in PDF.

Main thing is that you specifically answer the tasks and have sufficient explanations, and refer to key sentences and ideas from various articles* where relevant to support your analysis. *= the key articles are available for free online - but if not most from Curtin’s Library databases (but see doc. 2). Note, the word count is a suggested maximum.

The EPA will take up some of your thinking time, but this is a doable assessment.

A general guide on what the marker is looking for in this assessment is recalling the tutor- student discussions in the M6, M7 and M8 workshop sessions. Your tutor as an exemplar would have gone through the process of how best to explain price elasticity of demand and the key isoprofit diagram, and so on. The lectures on E1 and E2 (especially the Module 7 topic) may come in handy as well.

You are to complete the two parts of this EPA by your human self -- no need for you to share/upload it on the web for extra help -- please no Gen-AI LLMs or other agent assistance. The lectures, set tutorial questions, and assigned readings within this brief and from the CORE text should be sufficient resources for you to draw upon to do the tasks well enough. Many thanks in advance for your cooperation, Brennan AI Tech Incorporated (BAT Inc.)

IMPORTANT: When ready to submit, ONLY include answers and prepare your document as following: Full Name and Student ID on the first page as a title in the Word document (or PDF) to Turnitin by the due date (see Assessmentstab on Bb).

B. Assessment Tasks

Q1 – 10 Marks

Consider these two scenarios for Nike shoes and how the price elasticity affects its revenue:

For each scenario, do the following:

a.    Draw a single straight-line demand curve and explain the relevant details on the price elasticity of demand (PED).

b.   Show the workings of your calculation of PED.

c.    Describe and quantify what would happen to revenue in this case.

d.   In your answer, use hypothetical incremental values (rough guesses from your imagination) for the prices on the y-axis and quantities on the x-axis.

500 ± 100 or so words should be sufficient

Q2 – 15 Marks

Adidas has gained brand momentum and outperformed Nike in the first half of 2024. Consider Addidas’ classic shoes, Sambas which are back in vogue (for now).

https://www.fastcompany.com/91118038/sneaker-sales-sambas-2023-shoe-year-will-likely-peak-soon-but-adidas-has-plan

Assume the firm sells the base model of Sambas direct-to-consumers (DTC) from their online store at a profit-maximising price of $100 USD. Assume the average costs of production is $60 USD per shoe. This figure includes the costs of materials (e.g. soles, synthetic leather, threads, logos/inks, trims etc.),

labour, shipping, insurance, marketing, and other expenses/overheads. Demonstrate and explain what the profit of this firm might look like using a key economics diagram, as discussed in the economics    lectures/videos and tutorials in BLAW1002 S2 2024. In your answer:

a.    For the incremental quantities of monthly shoe production on the x-axis, use hypothetical values (rough guesses from your imagination). Use intuition for making up the incremental prices/costs on they-axis.

b.   You will hand draw the diagram, including the one (1) isoprofit curve. Be accurate when you draw

your isoprofit curve. To show to the reader that your profit is the same (‘iso’), calculate and show your workings of what the (same) iso-profit would be for the price of $200 and for $80.

c.   At the profit-maximising price, identify the areas of producer and consumer surplus, and calculate the price markup.

d.   Finally, analyse and compare the profit and price markup if Adidas discounted the price of shoes by 30% for the month of September.

500 ± 100 or so words should be sufficient

Q3 – 5 Marks

‘It is possible in future for Nike to be swept away by the forces of creative destruction’ . Critical evaluate this statement and elaborate on why Nike has had its profits eaten away by 2024 based on the (freely-available) articles below:

https://www.modernretail.co/operations/why-nikes-dtc-pivot-didnt-pan-out/

https://www.businessoffashion.com/articles/retail/nike-sportswear-market-challenges-john-donahoe/

https://underthelaces.com/posts/nike-to-prioritize-budget-friendly-lineup-amid-cost-sensitive-market-01j1g9w8094k

https://www.thetimes.com/business-money/companies/article/how-nike-fell-behind-in-the-race-to-be-the-king-of-trainers-dmq0pfg5k https://www.telegraph.co.uk/fashion/news/nike-trainers-sales-drop-off/

400 ± 100 or so words should be sufficient