ECON90077 Economics Markets and Organization Questions and Answers


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ECON90077 Economics market






Choose an Australian industry and analyze the most important microeconomic characteristics affecting its profitability by using the relevant concepts and theories we have studied in Modules 1 – 6. You should choose three or four of the most significant factors influencing profitability. You can choose factors that are currently affecting your chosen industry, or factors that seem likely to affect the industry profitability in the near future. Some possibilities to consider are:  The microeconomic structure of the industry. Can the market be classified as monopoly, oligopoly, monopolistic (imperfect) competition or perfect competition?


  1. What are the features of the industry that you believe give it this classification?


  1. Things to consider are the nature of the firms output (homogenous or heterogeneous), the nature of the firms themselves (again, homogenous or heterogeneous), and in particular market concentration (i.e. are there a small number of large firms, or large number of small firms?)


  1. Is there anything significant about the cost structures (shape of the firm cost curves) that you think determines the relative size of the firms?


  1. Do the firms engage in price or non-price competition?


  1. How does government policy affect the industry? Is there likely to be changes in government policy in the future that may threaten the profitability of the industry?


  1. Barriers to entry. Is it difficult for new firms to enter is there free entry/exit?


  1. Have there been any significant new firms enter the industry in the recent past?


  1. Some factors that might influence the barriers to entry are brand loyalty, economies of scale, patents and copyrights. Market power. Do either the buyers or sellers have significant market power that can affect the price of the output. You should think about the market power that might exist for the firm output, but ALSO the firm inputs (i.e. do any of the firms suppliers have sufficient market power to control the price of the inputs?)


Technological changes.


  1. Have there been significant technological changes that have affect profitability in the past, or likely to in the future?


  1. Price discrimination do the firms engage actively in price discrimination?


  1. If so, how do they do it, and what enables them to be able to successfully price discriminate?


  1. The above list is not exhaustive, if you believe that other factors are significant, then please feel free to include these factors. Please remember that you do not need to discuss all of the above points. Just choose the 3 -4 factors that you consider to be the most significant for your particular choice of industry. A convenient source of information on Australian industries can be found here:


  1. g=402862&p=2741309 you will likely find IBIS World and or Market line in the above link to be very useful. However, please note that both of those databases include a Porters 5 -forces analysis of Australian industries. The 5 forces model is a management tool that simplifies microeconomic concepts. However, we are teaching you how to conduct formal microeconomic analysis in ECON90077. In other words, we are teaching you the real thing! Please, do NOT do a5 forces analysis of your chosen industry. In choosing an industry, it is probably a good idea to let your subject coordinator, David Christie, know what your choice is before you get too far into the research. Choosing an industry that is interesting and original will be held in high regard. In the past, we have often found that students who choose an industry that they have personal experience with (e.g. maybe they work in that industry) often produces the most insightful assignments.


  1. To summaries, in this case study you should: Introduce and define the industry that you will analyze; briefly describe the first factor you will study and analyze it to determine how it affects the industry profitability. Where possible, provide evidence; Perform the same steps with the second factor you are considering; Perform the same steps with the third and fourth factors you are considering (if there is a fourth one);Provide any concluding remarks; Add a bibliography, collecting all references cited in the text. (Use a consistent citation style. We recommend you use either the 6th -edition American Psychological Association style, also known as APA 6th, or the Harvard Style. Our library excellent citation guide is here:


  1. Reference – management/cite The main factored considered in marking your case study are:



  1. For example, does the essay display sound and extensive research of the industry chosen?


Knowledge of economic concepts:


  1. Has the assignment used the appropriate economic concepts? Does the assignment show a thorough understanding of those concepts?


Quality of the analysis and application of economic concepts: Is there a logical and thorough supporting argument or description of how conclusions have been drawn? Have economic concepts been applied in an effective manner? Are the assumptions clearly described? Is an understanding shown of any relevant qualifications to the conclusion?


Presentation: Has the industry been properly defined and identified? Are the writing style andOrganisation of material such that the main ideas and arguments can be understood? Note that diagrams are often useful for illustrating key economic models and concepts. Use a concept or concepts that we studied in weeks 1 -6 of the subject to pose and answer an interesting question about some aspect of the economy or society, or some pattern of events or behavior you have observed or know about. The idea for this question comes from Robert Frank who is Professor of Economics at Cornell University. He has used this question in teaching Introductory Microeconomics at Cornell for the past decade or so, and in his recent book The Economic Naturalist he reproduces some of the best questions and answers submitted by students. The objective of the question is to give you practice in applying economic concepts to help understand what happens in the economy or to explain other events or behavior in society, and in writing clearly about applying economic concepts in this way.


  1. Some of the concepts you could choose from to use in this question are: Cost -benefit principle Opportunity cost Incentives Demand/supply model Externalities  Public goods  Costs Competition  Market power Some examples of the questions that have been posed by Robert Frank students are : Why are brown eggs more expensive than white ones?


a) Why do female models earn so much more than male models?


b) Why are hotel prices in Sham El Sheikh at their lowest during periods of highest occupancy?


c) Why do retailers put Christmas decorations on display in September?


d) Why do so many supermarkets stay open 24 hours a day?