Assignment - Price Variation In Crude Oil Impacts On Stock Market

Added on - Sep 2019

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EVALUATIONThis assignment accounts for60%of the total marks for the courseand shall be assessed based onthe Rubricsattached.You would be given feedback on the assignment before the Final Semester Examination commences.PLAGIARISM: MARKS DEDUCTIONWarning:The submitted assignment will automatically undergo a similarity check. If plagiarism isdetected, marks would be deducted as follows:No.% Similarity Group% of Mark Deduction10 – 300230.01 – 505350.01 – 7010470.01 – 10010015000 words
ASSIGNMENT QUESTIONPART 1PURPOSE:The purpose of this assignment is to enable the students to enhance their knowledge on thefundamental economic concepts such as profits, prices, inputs and outputs; and to use thesefundamental concepts to determine factors affecting demand for and supply of goods and services.REQUIREMENT:a.In any market systems, the role played by economic profits is crucial in assisting resource ownerto make optimal decisions. Not only the existence of profits, but the level of these profits willdetermine the type and quantity of goods and services that will be produced and sold, which inturn influence the resulting derived demand for resources. There are several theories of profitwhich can explain how this happens.You are required to select any successful profit-making organization and determine reasons forthe existence of profits in that organization.(10 Marks)b.The price variation in crude oil impacts the sentiments and hence the volatility in stock marketsall over the world. The world equilibrium price of gasoline fluctuates primarily because of spikesand collapses in crude oil input prices caused at various times by supply disruptions and gluts,increasing demand in developing countries, and speculation.Does the above statement explain what happens to (i) the world price of gasoline (petrol) ingeneral and (ii) the price of petrol in Malaysia, in recent years? Support your answer withappropriate facts and figures.Are there any other factors that affect the price of petrol in Malaysia? Explain.(10 Marks)(TOTAL : 20 Marks)2
PART 2PURPOSE:The purpose of this assignment question is to enhance the skill of the students to estimate demandfunctions and to appreciate their usefulness in the real world.REQUIREMENT:You have been presented with the following data and asked to fit statistical demand functions:PERIODQUANTITYPRICEINCOMEADVERTISING11208.0010321654.0022731207.0020541653.0020851804.0030869010.0019671504.001810.281901.60259.391605.00308102002.00359.5a.Linear Relationshipi.Identify the dependent and independent variables.ii.Estimate a linear relationship between the dependent variable and all the independentvariables.iii.What are the tests that you would use to determine the “goodness-of-fit” of the estimateddemand function? Conduct the tests and explain the results.iv.Discuss the economic implications of the various coefficients.v.Compute the price elasticity of demand and income elasticity of demand in period 10.Elaborate your answers.(15 Marks)b.Non linear relationship.i.Estimate a logarithmic form of the demand function.ii.Is the estimated demand function “good”? Why or why not?iii.Compare with the linear form above. Elaborate.(15 Marks)(TOTAL : 30 Marks)3
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