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Assessment Task 3: Case Analyses
Answer any FOUR of the following questions. Each question is worth a total of 12.5 marks. If
more than four questions are answered, marks will be awarded for the first four answers
only.
QUESTION 1
High-performance cars (HPCs) are automobiles with engines that generate great power
elative to their weight. They boast high acceleration, speed, cornering and
eaking
performance. But they obviously come with a very high price tag. Some people even buy them
to publicly display their wealth. The Singapore economy has grown rapidly between the 1960s
and 2018 with rising incomes across the island. Examine the likely consequences of rising
incomes on the Singapore HPC market and one or two related markets.
QUESTION 2
The speed limit on Singapore roads, even expressways, never exceeds 90 kmh, much less than
the top speed of HPCs. But there is a road racing culture where individuals perform stunts
and races on public roads, far exceeding speed limits. What, if anything should government
do about the HPC market? Should such cars be banned outright? What would be the problems
with such interventions?
QUESTION 3
The car industry is characterised by heavy research and development activity. This activity has
a high fixed cost and can only be undertaken by large firms with significant monopoly power.
Sometimes the innovations of the car industry spill over into other industries. There is also a
great deal of product differentiation, with certain
ands enjoying reputation and loyalty.
What are the likely effects of these aspects of the industry on the market structure for HPCs?
Examine this industry using the theory and models of industry structure. Should government
e wo
ied about any aspect of how an industry with this market structure will perform?
QUESTION 4
BMW is one of the world’s best known HPC manufacturers. Developing new cars is a costly,
uncertain and complex process. This company would need to consider which parts of the
vertical chain to outsource and which to conduct inhouse. Using the theory of the optimal
oundary of the firm, discuss BMW’s make-or-buy decision for developing and producing a
HPC. What stages of the vertical chain should BMW consider conducting inhouse, and which
should be outsourced? Provide reasons for your findings.
QUESTION 5
Consider the following hypothetical case. Only BMW and a competitor, Mazda, are
considering launching a new, niche HPC in the Asian market. The issue is what price to
charge. Both new cars are very similar in performance and production cost. Analyse the
interaction between the two firms using game theory. Present a payoff matrix to model the
situation and analyse it for Nash equili
ium. What can either of these firms do to make
their best, most-prefe
ed outcome more likely?
assessmentguidelinesPAM(all 2021 sem 2).pages
ECON1025 - Semester 2 2021
Prices and Markets
Assessment Guidelines
Professor Robert Hoffmann
Assessment Task 1: Online Quiz (10%)
Assessment Task 2: Microeconomic Analysis Report (40%)
Assessment Task 3: Microeconomic Case Analyses (50%)
Assessment Task 1: Online Quiz (10%)
This is a multiple choice quiz worth 10 marks. It is based on all the material from weeks 1-3
(lectures and tutorials). You must access and complete it on Canvas. The quiz will consist of 10
questions and you have 60 minutes to complete it. All questions are equally weighted. There is no
negative marking (where a wrong answer loses you marks). You will get one attempt at this quiz.
You will not be able to to go back to a previous question once you submitted your answer to it. The
elow quiz and the weekly tutorial quizzes provide some guidance as to what the assessment task
1 will look like in terms of format and type of questions.
Sample Quiz
1. Based on the table below, using the midpoint formula, what is the income elasticity of
demand for good X?
-3.5
-0.29
0.29
3.5
2. Which of the following statements is not co
ect, based on the figure below?
When the price is $10, quantity supplied equals quantity demanded.
When the price is $6, there is a surplus of 8 units
When the price is $12, there is a surplus of 4 units.
When the price is $16, quantity supplied exceeds quantity demanded by 12 units.
3. Which of the following phrases best captures the notion of efficiency?
Minimum Waste
Absolute Fairness
Equal Distribution
Equitable Outcome
Income Q of X Purchased
$30,000 2
$40,000 6
4. Suppose Jim and Tom can both produce baseball bats. If Jim’s opportunity cost of
producing baseball bats is lower than Tom’s opportunity cost of producing baseball bats,
then
Tom must have an absolute advantage in the production of baseball bats.
Jim must have an absolute advantage in the production of baseball bats.
Tom has a comparative advantage in the production of baseball bats.
Jim has a comparative advantage in the production of baseball bats.
5. The cross-price elasticity of demand between Kit Kat and Mars is negative. Based on this
information alone, we can conclude the two products are substitutes
True
False
6. Economics is primarily the study of
the state, nation, government, and politics and policies of governments
the problems related to the existence and evolution of society
how agents choose to allocate scarce resources and how these choices affect society
the mental functions and behaviour of individuals and groups
7. Which of the following statements co
ectly highlights the difference between
microeconomics and macroeconomics?
Microeconomics deals with a small part of the economy, whereas macroeconomics deals with
aggregate economic performance.
Microeconomics describes what economic agents actually do, whereas macroeconomics
describes what economic agents ought to do.
Microeconomics primarily deals with positive analysis, whereas macroeconomics primarily deals
with normative analysis.
Microeconomics is descriptive, whereas macroeconomics is advisory.
8. Which of the following best describes equili
ium?
A stable situation where no economic agent would benefit by changing his or her behaviour
A situation where economic agents do not optimise as they do not have perfect information
A situation where only one individual or firm makes an optimal decision
A situation where the government intervenes to allocate resources
9. Empiricism is analysis that uses ________ to test theories.
illustrations
philosophy
data
value judgments
10. Which of the following is an example of a positive economic statement?
An increase in income causes an increase in savings.
Eliminating poverty is more important than reducing inflation.
Economics is the most useful social science.
The government should ideally work as a welfare state.
Answers: 1D;2B;3A;4D;5FALSE;6C;7A;8A;9C;10A.
Assessment Task 2: Microeconomic Report (40%)
Using models and theories of either (1) the market or (2) market failure (i.e. only material from lectures 2 to
6), perform a microeconomic analysis of one specific appropriate issue or phenomenon of your choice.
Clearly explain your chosen question, method and conclusions.
Assessments task 2 has limit of 1500 words to be submitted on Canvas. Your submissions should be word
processed (i.e. produced using a program such as Microsoft Word) and contain word count and bibliography.
There are no specific requirements for font size or typeface, spacing or margins other than that your
document should be easy to read. You also do not need an executive summary or other elements not
specifically mentioned here. For every 10% word count (counting everything but the bibliography) over the
limit you will lose 10% of the assignment marks until it reaches zero. There is no discretionary margin above
this limit. There is no minimum but you are advised to use all the words allowed to allow for a more
developed and detailed analysis.
Your submission will receive an automatic Turnitin similarity score that should not exceed 25%. You should
check this score using the tool on Canvas before submitting. Exceeding this limit raises the risk of your
submission being subject to an academic integrity process. As per University regulations late assignments
eceive a 10% penalty per day until the mark reaches zero. Marks will be given according to the ru
ics on
Canvas. You must attach a completed coversheet with your submission (template appended below).
Your task is to conduct microeconomic analysis of an issue that you select yourself, just as businesspeople
and policymakers do. You will be assessed on what you learnt in the course by co
ectly choosing and
applying definitions, methods and theories from lectures and tutorials 2-6. As this is a microeconomics
assignment you should not write a general or journalistic report or use concepts from other courses not
discussed in this course, including macroeconomics.
Clearly structure your report (depending on topic), for instance using numbered sections for each of the parts
of the task, e.g. introduction, concepts, model, analysis and conclusion. Introduction and conclusion will
normally be shorter. The length of individual sections could reflect their weights in the grading shown in the
u
ic below. Sample topics, questions relating to them and appropriate methods/analytical tools are given in
Assessment 2 Steps
1 Choose
topic and
question
Look at the business and economics news for ideas for an appropriate issue. It needs
to fit the purpose of microeconomics (lecture 1) - a topical, important example of
esource allocation with questions you can answer by applying microeconomic
methods from the lectures relevant to the assignment. State the question, why it’s
interesting and economically significant. Present facts or descriptive data to illustrate.
The issue needs to be a specific (topical or historical) case. This means you will discuss
a specific market for a product, service or factor of production in a specific context
ather than a general economic issue or problem. Also make sure your topic does not
fall within