ECO5000 Assignment 1: MBA Benefits at USQ, Security Tax, Cost Analysis

This economics assignment provides solutions to three questions covering the benefits and costs of pursuing an MBA at the University of Southern Queensland (USQ), the impact of a security transaction tax on Wall Street, and marginal cost analysis. The first question evaluates the advantages of an MBA, such as increased job opportunities, higher income potential, and job security, while also considering the associated costs, including course fees and opportunity costs. The second question examines how a tax on security transactions can reduce market efficiency by increasing transaction costs and distorting resource allocation. The third question involves calculating marginal cost, fixed cost, and determining optimal labor hiring decisions based on marginal benefit and marginal cost analysis. The assignment uses economic principles to assess real-world scenarios and provide informed recommendations. Desklib provides solved assignments and past papers for students.

Running Head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Course ID

1ECONOMICS ASSIGNMENT
Table of Contents
Answer 1..........................................................................................................................................2
Answer 2..........................................................................................................................................3
Answer 3..........................................................................................................................................3
References........................................................................................................................................5

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Answer 1
Education plays an important role in building career. Students opt for higher education to
increase their prospective job opportunities. There are several benefits of pursing MBA or other
postgraduate program at USQ. Firstly, MBA or equivalent postgraduate degrees open new job
position in the industry. Today job opportunities for MBA graduates are growing. It also makes
the aspirant eligible to apply in high position jobs requiring MBA or similar post graduate degree
as compulsory. Secondly, higher education degree at present prepare the path of higher income
in future. People with MBA or postgraduate degree has the possibility of earning a higher
income as compared to those having only high-school or graduate degree (Gallarza, Serić and
Cuadrado 2017). Third, postgraduate degree from a recognized university like USQ offers a
greater job security. The professional skills increase with MBA or postgraduate program which
help get a secured job in future. Pursuing postgraduate degree from a standard recognized
university also provides assistance from the University in searching jobs. In all, post graduate
degree or MBA benefits a student in several way.
Before pursuing MBA or other post graduate course students need to consider the
associated benefits of such courses. Having a post graduate degree from a recognized university
is not a free lunch. The student have to pay a considerable amount as course fee. The fee for
MBA course in USQ approximately equals $33, 645 (mbanews.com.au 2018). Apart from course
fees, the decision of going fir higher studies also involve some opportunity cost. The opportunity
cost is the forgone benefits from other activities. After completing graduation degree, students
can directly enter the labor market and join some full time jobs. The salaries that could have
earned from the full time jobs represent opportunity cost of MBA or equivalent degree. The
money that is given as a course fee might be used for some other purposes (Sword 2014). The

3ECONOMICS ASSIGNMENT
cost of not selecting the alterative activities are the opportunity cost for pursuing higher degree
courses.
Answer 2
A tax on security transaction affects the efficient functioning of security market. Tax is
the compulsory payment to the government. The new tax imposes an additional transaction cost
on the exchange of security. The price of securities signals important information crucial for
important decision in the security market (Capelle-Blancard and Havrylchyk 2016). The flow of
wealth depends on the attitude of savers and borrowers who respond to security prices and
associated return. The new tax on security transaction of Wall Street reduces the efficiency of
price determination in the market by raising the transaction cost. Investor would no longer find it
worthy to purchase a security in the presence of a tax. A security transaction tax by reducing
return to financial securities lead to inefficiency of allocation of stock of economy’s resources.
In response to tax, wealth are allocated to less productive ways. Tax often increases risk level in
the market by hindering risk sharing (Pollin, Heintz and Herndon 2016). The proposed tax on
security transaction on Wall Street market thus has a distortionary effect on wealth in terms of
increasing transaction cost, reducing price and risk efficiency.
Answer 3
1)
Marginal cost is resulted change in total cost due to unit change in factor input. With 3 units of
labor, total cost is given as 200. As the labor unit increase to 4, total cost increase to 240.
Therefore, marginal cost for hiring 4th worker is obtained as (240 – 200) = 40
2)

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Fixed cost does not vary with output level or factor input. It remain unchanged irrespective of
level of output (Bernanke, Antonovics and Frank 2015). The fixed cost thus remains same with
varying number of workers. Therefore, total fixed cost for 5 units of worker is 50.
3)
Firms hire additional workers as long as marginal benefit from hiring additional worker is less
than the marginal cost. Marginal benefit of hiring one additional worker is obtained from
marginal product of the extra labor (Cowell 2018). Marginal product is the change in total
product due to unit change in labor input. Hiring 7th worker, total product increases by 5 units.
Therefore, marginal product of 7th worker is 5. Per unit price is $2. Therefore, marginal revenue
product is (MP*P) = (5*2) =10. The marginal cost of 7th labor unit is (280 – 260) = 20. As the
marginal benefit of 7th worker is less than the marginal cost, firm should not hire 7th worker.
4)
Hiring 6th worker increases total product by 7 units. That is marginal product of the 6th unit of
worker is 7 unit. Price for each unit is $2. Marginal revenue product from 6th labor unit therefore
equals (7*$2) = $14. The marginal cost for 6th labor unit (260 – 250) = 10. The firm would hire
6th worker as marginal benefit exceeds marginal cost.
5)
Total cost for 5 workers is 250. Average cost for 5 workers is (Total cost/number of labor hired)
= (250/5) = 50.

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References
Bernanke, B., Antonovics, K. and Frank, R., 2015. Principles of macroeconomics. McGraw-Hill
Higher Education.
Capelle-Blancard, G. and Havrylchyk, O., 2016. The impact of the French securities transaction
tax on market liquidity and volatility. International Review of Financial Analysis, 47, pp.166-
178.
Cowell, F., 2018. Microeconomics: principles and analysis. Oxford University Press.
Gallarza, M.G., Serić, M. and Cuadrado, M., 2017. Trading off benefits and costs in higher
education: A qualitative research with international incoming students. The International
Journal of Management Education, 15(3), pp.456-469.
Pollin, R., Heintz, J. and Herndon, T., 2016. The Revenue Potential of a Financial Transaction
Tax for US Financial Markets. Political Economy Research Institute Working Paper Series,
(414).
Ready, B. (2018). University of Southern Queensland MBA. [online] MBA News Australia.
Available at: https://www.mbanews.com.au/university-southern-queensland-usq-mba/ [Accessed
31 Jul. 2018].
Sword, H., 2014. Dancing on the bottom line: an unruly cost–benefit analysis of three academic
development initiatives. Higher Education Research & Development, 33(4), pp.783-793.