Faculty of Business and Enterprise

Assignment Cover Sheet for Postgraduate Courses

(for individual and group assignments)
electronic format. This cover sheet is to be attached to all assignments, both hard copy and

STUDENT(S) DETAILS Student 1

Student ID Number(s) Family Name(s) Given name (s) 4240286 Binti Wan Sarkawi Sharifah Zatil Aqmar

Student 2

Student 3

Student 4

Student 5

PROGRAM TITLE SUBJECT DETAILS

Subject Code Lecturers Name Title or Topic Addressed Due Date HBE 613 Dr. Evan Lau Subject Title Economics

ASSIGNMENT DETAILS
Microeconomics Date Received

1 August 2011

DECLARATION

1. I/We hold a photocopy or electronic copy of this assignment which can be produced if the original is lost/damaged;

2. To the best of my/our belief, no part of this assignment has been copied from any other students

work or from any other source except where acknowledgement is made in the text; 3. No part of this assignment has been written for me/us by any other person except where such collaboration has been authorised by the lecturer concerned and where acknowledgement is made in the text; 4. No part of this assignment has been previously submitted as an assessable item, except where authorised by the lecturer concerned and where acknowledgement is made in the text; 5. SAFE ASSIGN: For units where Safe Assign facility is available in the Blackboard site I/We declare that this assignment has been submitted to Safe Assign, both in draft and final form, and all identified matches and referencing have been checked and corrected. I / We accept that electronic submission of this cover sheet will be taken as consent to the terms Student Signature(s)

MARKERS MAIN COMMENTS

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Date

Grade/Mar k

August 2010

HBE 613 Economics

ASSESSMENT TASK MICROECONOMICS

Faculty of Business and Design

INTRODUCTION Economically, power energy is a one of the commodities that can be traded. However, due to the nature of the commodity, not all businesses can supply electricity because of certain downsides of its market, for instance, set-up costs, collateral investment and the uncertainty of the market. And due to this, its market is mostly monopoly where only one supplier conquers the market. The same goes to the state of Sarawak in Malaysia where its electricity is supplied by Syarikat SESCO Berhad, or formerly known as Sarawak Electricity Supply Corporation (SESCO). Syarikat SESCO is currently serving the whole population of Sarawak energy supply of electricity. According to Wikipedia, for the past four years, electricity sales have grown eight percent per year, in average.

DEMAND AND SUPPLY Factors Affecting Demand In relation to price, demand inelasticity means that a products or services quantity demanded varies a bit even if the price change significantly. For instance, this might happen when the product/service is relatively a necessity, when there are any substitutes or complements, or when the price is of inconsequential amount if compared to the consumers income. Besides that, technology also can put an impact in the amount demanded. For example, we may use electricity for all purposes, i.e. air conditioning, watching television, using kitchen appliances and the demand may not be elastic for all uses. Turning on the air condition during hot weather may be needed, but there are other alternatives that we can use, such as, using a fan (low consumption of electricity) or having better air ventilation. As for heating in a cold weather, we can use other choices of energy like natural resources (woods, gas, et cetera). These alternatives prove to affect the amount demanded of electricity.

Term 1, 2011

HBE 613 Economics

ASSESSMENT TASK MICROECONOMICS

Faculty of Business and Design

Factors Affecting Supply Like demand for electricity, technology also plays a role in affecting the supply of electricity. The technical considerations of supplying electricity to the consumer affect the distribution also transmission of electric power to the consumers. For instance, the rotation, model and quality of the electricity generator rotor determine the level of energy that can be produced. Also, the supply depends on the type of source that is used to generate power. Water turbine uses water, coalfired generator uses coal, et cetera. And the cost to obtain these sources may affect the electricity supply, for an example, in a country where coal is readily available, its the best economical choice to use coal to produce power supply compared with other countries that do not have coalmines. The New Market Equilibrium Market is a place whereby there is an interaction between buyers and sellers over a commodity at a given period of time. Market equilibrium is the condition that exists when quantity supplied and quantity demanded are equal. At equilibrium, there is no tendency for the market price to change. The Market Structure The market is made up of millions of individual decision makers who make trillions of decisions, all of which are attempting to maximize their individual or business self-interest. The market is a mechanism by which consumers and producers can come together to respond to each others desires and wants in an efficient way. Competition is the mechanism of control for the market system. It not only guarantees that industry responds to consumer wants, but it also forces firms to adopt the most efficient production techniques.

INTERVENTION IN THE MARKET An externality is a cost or benefit resulting from some activity or transaction that is imposed or bestowed upon parties outside the activity or transaction. And they are sometimes called spillovers or neighborhood effects.

Term 1, 2011

HBE 613 Economics

ASSESSMENT TASK MICROECONOMICS

Faculty of Business and Design

1. 2. 3. 4. 5.

Five approaches have been taken to solving the problem of externalities: Government-imposed taxes and subsidies, Private bargaining and negotiation, Legal rules and procedures, Sale or auctioning of rights to impose externalities, and Direct government regulation.

Term 1, 2011

HBE 613 Economics

ASSESSMENT TASK MICROECONOMICS

Faculty of Business and Design

BIBLIOGRAPHY Lau, E 2011, 'Topic 5: Pure Competition and Monopoly', HBE 613 Economics, Learning materials on Blackboard, Swinburne University of Technology, viewed 29 July 2011. Lau, E 2011, 'Topic 7: Market Failure and Resource Allocation', HBE 613 Economics, Learning materials on Blackboard, Swinburne University of Technology, viewed 30 July 2011. Presentation on general principles of microeconomics and demand and supply for HBE 613 Economics, by Lau, E, School of Business and Design, Swinburne University of Technology, Session 1, 2011.

Term 1, 2011