Assignments
-- ECO 202 -- Principles of Microeconomics
ECO-202 - Web Assignment - Choose 3 problems among the 7 available below.
This assignment will be due on Thursday, November 20. Neatness is required
and no late work will be accepted.
Your name: _______________________________________________
PROBLEM # 1:
Congratulations! You have been hired as the economic researcher for XYZ consultants.
For your first assignment, you've been asked to compare the market structure
of two different goods or services: ________________ and __________________
(You fill in the two goods or services.)
Use information from the US Census Bureau's Economic Census to analyze these
market structures at: http://www.census.gov/epcd/www/concentration.html
Browse through this site by clicking on one or more of the broad categories
("Utilities", "Manufacturing" and so on) to see specific
goods and services. At this point, you may change your two goods and services
listed above.
1. What do you learn about the market structures of these two goods or services?
Make certain that you identify the four-firm concentration ratio (see textbook
chapter.)
2. Which market structure label (monopoly, oligopoly etc.) best describes
each one? Explain.
3. In each market what would you expect for each of the following: prices;
entry of new firms; innovation; size of firm; short run and long run profitability?
Collaborative option, if you choose to work with a classmate:
Send your analysis to another student as instructed. Compare the good or service
you analyzed with the one in the analysis from another student.
1. Which good or service would be better for a new entrant in the market?
Why?
2. Which good or service would be offered at more competitive prices to the
consumer? Why?
3. Which good or service would be better for the long-run profits of the producer?
Why?
PROBLEM # 2
Every year there
are new, and sometimes unexpected mergers of US corporations. Many of these
proposed mergers cause considerable controversy and are brought before US
antitrust authorities or to the courts.
a. Choose a case for study at: http://www.antitrust.org
Click on "mergers," then "cases." Select one of the cases
for further study.
b. What was the market under investigation? Which firms were involved in the
case? What issues were raised by those opposed to the merger? What data was
collected in this case? What was the outcome (if decided)? What was the basis
of this decision?
c. If the case was decided, does the outcome make sense to you? Why or why
not? If the case was not decided, what do you believe would be the most appropriate
outcome? Why?
PROBLEM # 3
The Prisoner's
Dilemma is a famous game in game theory in which two prisoners must decide
whether or not to cooperate with another, that is declare their mutual innocence.
If both prisoners cooperate, that is do not confess their mutual guilt, then
they both go free. If one prisoner cooperates, but the other does not, then
the non-cooperating prisoner receives a lighter sentence and the cooperating
prisoner is punished severely for refusing to confess. If both prisoners refuse
to cooperate-that is they both say the other is guilty-then they both are
punished, but less than if only one declared his innocence.
a. Play the Prisoner's Dilemma at: http://serendip.brynmawr.edu/playground/pd.html
Try one set of rounds for practice.
b. Design a strategy for the game. Describe it and then test the strategy
in three rounds of the game. Did it work?
c. Read the section "What's so important about this game?" How does
your strategy compare with the "tit for tat" strategy used by the
game?
PROBLEM # 4
The US Small
Business Administration gives advice to new businesses. Will it help in a
monopolistically competitive market?
a. Go to the US Small Business Administration at: http://www.sba.gov/
Click on "Starting Your Business" then choose FAQ's (Frequently
Asked Questions.)
b. Look at the "Behavior" section of this chapter, "Monopolistic
Competition." For which behaviors does the Small Business Administration
provide advice? List these behaviors and summarizes the Small Business Administration
advice.
c. In a monopolistically competitive market, what else should a start-up business
in a know--in addition to the Small Business Administration advice?
PROBLEM # 5
What brand names
are advertised the most? Which goods or services are most advertised? Which
firms advertise the most? Advertising Age keeps track of all this information.
a. Go to Advertising Age at: http://www.advertisingage.com/
Click on "Data Center" then "Marketers" Compile a list
of the ten top firms in terms of advertising spending.
b. Are these firms in monopolistically competitive markets? (See list in this
chapter and list of oligopolies in the previous chapter.)
c. Look at location of these firms' ads. Where do these firms advertise? Why
might they choose these advertising venues?
PROBLEM # 6
"Deregulation"
is a hot debate topic among economists. On one side, some economists believe
that many regulations have decreased potential economic growth. Other economists
maintain that most regulations are necessary to protect the environment, working
people, and consumers.
a. Follow the debate on one deregulatory topic at the Cato Institute: http://www.cato.org/research/index.html
Choose "More topics" then "Regulation." (for the pro-deregulation
argument) and, OMBWatch at: http://www.ombwatch.org/
(for the pro-regulation argument.)
b. For each side in the debate, summarize the strongest argument. Explain
why this argument is especially convincing.
c. For each side in the debate, identify one weak argument. Explain why this
argument is especially weak.
PROBLEM # 7
Debate about
government regulation is worldwide. In some nations, governments have adopted
a deregulatory attitude, while in others government regulation is growing
more extensive.
a. Go to http://www.oecd.org and search
for regulatory reform.
b. What is the trend in government regulation in this country? Is there a
move toward deregulation, or maintenance of government regulations? Explain.
c. Choose one change that has been proposed for this country. Summarize the
change. How does this regulatory policy compare with regulation for the same
issue in the US?
Due to popular demand, I am assigning the following for you to get extra practice on costs and perfect competition. Due on Thursday, October 23. You will get credit for doing it - making an honest effort, even if you do not get it all correct.