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Essay: Markets in Action
Maximum 1,300 words — 35% of the course final mark
Due by 4:00pm, Friday 20 Oct 2023

Choose a real-world market and a real-world company that operates in that market. Write a 1,300 word essay using the tools of economic analysis describing and explaining how a recent or upcoming domestic and/or international government policy could affect the company, its consumers and, if applicable, broader social welfare. Graphs and figures should be included if they support your analysis. You should summarise your analysis in a single paragraph in your essay’s conclusion. Finally, you should briefly criticise your analysis, emphasising its strengths and weaknesses for understanding and providing policy guidance in the real world. Provide a properly formatted references section (not a bibliography) for all cited claims. You must write the essay using the template provided. Failure to do so will attract a penalty.

Your essay must be saved as a Word document and submitted via the Turnitin assignment folder on the Econ7002 Blackboard website by the due date and time.

This is an exercise in which, among other outcomes, you need to demonstrate your independence in identifying and conducting an economic analysis of a relevant company+market+policy sce nario. All information you need is contained in this instruction sheet. Please do not email questions about the assignment to your teaching team. All questions should be raised during the lecture, so that all students receive the same information.

1.1 Task Details

1) Briefly describe the nature and characteristics of your chosen company.

2) Briefly describe the prevailing market structure including (as applicable) relevant demand side and supply-side elasticities, externalities, public goods features, price controls, taxes, tariffs, subsidies, trade quotas and/or any other forces relevant to market efficiency and the firm’s competitiveness.

3) Briefly describe the recently enacted or upcoming domestic and/or international government policy facing the market.

4) Describe the announced reason and some other potentially plausible (possibly unannounced) reasons why the government might want to enact the policy.

5) Using the tools of economic analysis, explain how the announced government intervention will achieve its stated aims. Depending on the intervention, the analysis in both macroeco nomics as well as microeconomics perspectives may be required. For example, if you use the macroeconomic policy such as unemployment benefits to analyse, then the macroeconomic impacts must be discussed.

6) Note any unintended consequences of the policy, briefly describing how they might arise.

7) List and briefly describe any other reasonable means the government possesses for achieving its stated aims. Include a short statement with each describing its likely market and welfare impacts. Explain why the government chose to implement its announced policy instead of adopting another approach.

8) Find and briefly describe a real-life example of an essentially similar government intervention in an essentially similar market at any time previously anywhere in the world. Did that intervention produce its intended results? How can that example be used to inform your economic analysis in item 5, above?

9) Conclude your essay with a critical reflection about how useful your economics approach is for understanding and providing policy guidance in the analysed situation in the real world.

1.2 Clarifications and Guidelines

• Item 5 is the centrepiece of your work. You should aim to do it well.

• Market structure describes the conditions of the market, e.g., whether it is perfectly com petitive, a monopoly, monopolistic competition, or an oligopoly.

– You must clearly state the market structure on which you are basing your analysis.

– Justify your statement of the market structure model you use.

• Except for monopsonies and oligopsonies, you can choose a firm operating in any market structure for your essay. By the time we have discussed monopolies, you should have a good foundation for analysing perfect competition and monopoly market structures. Monopolistic competition and collusive oligopolies (which are in different respects both similar to monopolies) should also be quite accessible. Note that discussion of these are introduced relatively late in the course. Please be aware that if you choose a noncollusive oligopoly you will need to study much of the underlying theory of oligopolieson your own,including undertaking considerable research on material that we will not cover in this course. (If you are interested in an oligopolistic market, you can for examplelook at models of “Cournot competition.” It can help if you know calculus for this.)

• Use proper and consistent referencing style, including in your citations. You need to provide any in-text citation wherever applicable. It is recommended to follow the UQ Harvard referencing style. Guidelines for correct referencing techniques can be found in the UQ library, which can be accessed on the website https://guides.library.uq.edu.au/referencing/uqharvard-version-for-printing.

• Your essay’s word count must not exceed 1,300 words. Penalties apply otherwise. Your word count excludes material included in tables, figures, graphs and your essay’s Refer ences list. You must indicate the word counts in each section as per the template and ensure of the maximum 1,300 words in total.

• You will benefit by using diagrams similar to those presented in the course and textbook. These should be fully and correctly labelled. Appropriate use of diagrams is essential for receiving high marks.

• The assignment is due by 4:00pm on Friday 20 October 2023. Unless prior agreement for late submission has been formally provided by the Course Administrator, essays submittedafter the due date and time will be penalised according to the section 5.3 of the Econ7002Electronic Course Profile. A description of the process required for obtaining an Extension of Assessment Due Date can be found in section 6.1 of the Econ7002 Electronic Course Profile.

• Try to upload your assignment a few hours before the deadline since Blackboard and Turnitin system overloads can occur close to the deadline time.

1.3 Frequently Asked Questions

(a) What is a “recent or upcoming policy”?

A recent or upcoming ”new” policy is a policy that has been introduced in the last 12 months, i.e, 20 Oct 2022 or later, or that is planned for the near future. The abolition within the last 12 months or planned abolition of a government policy also countsas a recent or upcoming policy. Any ongoing policy that initially commenced prior to 20 Oct 2022 is not suitable.

(b) Does the market and company I choose have to be Australian?

No. However, all references must be in English (i.e., if you list a website, journal or newspaper article as a reference that supports your description of a foreign market, it must be in English).

(c) I do not have the data to exactly plot the aggregate demand/supply curve in my market. What can I do?

In almost all cases, you will not have the time or resources to gather the data to exactly plot the aggregate demand and supply curves for your market.1 Therefore, your figures will be mostly qualitative rather than quantitative in nature. The quantitative figure above exactly specifies where the demand and supply curves lie, whereas the mostly qualitative figure only specifies that the equilibrium price is 2, but leaves open the exact slopes of D and S, etc. The qualitative figure is nonetheless useful: e.g., by demonstrating that D and S still satisfy the laws of demand and supply, depicting relative price elasticities of demand and supply, etc.

Despite the absence of detailed information, qualitative figures allow you to draw important conclusions. E.g., you may be able to conclude from your qualitative figures that after the government intervention, the market price will fall and consumer surplus will increase, or that the burden of a tax might fall unevenly on suppliers or consumers, even though you will not be able to determine by exactly how many dollars the price will fall, exactly how the tax burden will be split, or by exactly how many dollars consumer or producer surplus will change.

(d) Do I have to format my essay in a particular way?

• Include your personal name, your family name and your student number on top section. Also indicate the word counts in each section. Your word count should exclude material included in tables, figures, graphs and your essay’s References section.

• Use 1.5 line spacing or double line spacing. 

• Fonts must be easily readable, including those used for figure captions.

Yes, you have to. We are strict with the word limit.

(f) How do I submit my essay?

Instructions for the submission of the essay via Turnitin will be posted on blackboard closer to the submission deadline. The submission will be electronic in Word format only (no hardcopies or pdf format).

(g) The Turnitin “similarity report” shows a similarity of x%. Is this still acceptable?

1.4 Marking Guidelines

• Content: relevance to the question, sound interpretation and understanding of economic theory.

• Clarity and robustness of argument: logical thinking, clarity, succinctness and coherence. 4Econ7002 Semester 2, 2023

• Fit of the theoretical model and analysis to the presented policy situation.

• Use of clear, well-labelled, relevant diagrams that support your arguments.

• Evidence of reading outside of your main source article and textbook.

• Use of references: correct and consistent citation format in the body of your essay; correct and consistent referencing format in the References section at the end of your essay. You should support your arguments with at least five (5) references . Note that the References section is just that. It is not a Bibliography (enter “references section vs bibliography”into your favourite internet search engine to see the difference). The following problems will attract penalties:

• Failure to answer the question (see Task Details, above).

• Writing style: incorrect grammar or spelling; long or disconnected sentences; incoherence;over-use of quoted material.

• Failing to grasp or address the core concepts or ideas.

• Poorly or ineffectively structured essay.

• Unclear or illogical flow of ideas.

• Ineffective, badly composed or unclear arguments.

• Weak or missing Introduction section.

• Weak or missing Conclusion section.

• Weak or missing critique of your analysis in your Conclusion section.

• Improper or missing citations and references.

• Including a Bibliography rather than a References section.

• Any amount of plagiarism.

• Late submission.

• Not using the template

• Exceeding the word count

• Choosing an older policy than instructed or making up the policy yourself.

1.5 Check-List and Hints

• Is your writing focused (free of unnecessary information) and have you explained your arguments well? 

Imagine that you have written your essay for your company CEO. Say you write about Widget Empire Australia, an Australian subsidiary of Widget Empire Inc., a world-leader in the production of widgets operating in dozens of countries. You are analysing the effects of an import tariff on widgets recently passed into law by the Australian Government.

– Your CEO is a very busy person. She needs to grasp the consequences of the import tariff on widgets in the shortest possible time. Hence, it is important that your essay remains as focused as possible. For example, a brief description of the nature and characteristics of Widget Empire Australia is useful background information that helps establish the context of your main analysis. It may be useful for justifying why you based your analysis on the economic model of a monopoly. However, a history of Widget Empire U.S.A., the U.S. subsidiary of Widget Empire, may not be necessary to understand your analysis in the Australian widget market context. Your CEO would prefer that you skip a description of Widget Empire U.S.A., as she does not need to understand Widget Empire U.S.A. for the issue at hand.

– It is crucial that you underpin your claims with factual information and logical analysis. For example, your CEO may be frustrated if you simply write: The demand for widgets is relatively inelastic. 

You have provided no basis for your CEO to evaluate that claim. She would much prefer that you explain and justify your claim. For example, The demand for widgets is relatively inelastic in Australia. This is because widgets are an essential tool for anybody living close to a beach (like themajority of the Australian population), and because there are no good sub stitutes for widgets. Walter Widget estimates the elasticity of the demand for widgets to be 0.13 in absolute terms (Widget, 2019, p. 17). 

Later, in your References section, you can provide the exact reference: Widget, Walter (2019), Widgets for Everybody, New York:Widget Interna tional Press, 2nd edition.

• Ensure you do not claim things unless they are supported by facts or conclusions from reputable sources. You will need to cite every claim you make. For example, it is poor form to write:

Widget Empire Australia’s sales increased by 50% in 2018.

Rather, you should include a properly cited source for the claim, e.g.,

Widget Empire Australia’s sales increased by 50% in 2018 (Widget, 2019, p. 6).

then include a reference to Widget (2019) in your References section.

• Does the economics model you chose for your analysis fit your chosen issue well? Have you justified your modelling choice? Have you justified all assumptions that you make?

• Is your essay well-structured? A clear structure makes your essay flow smoothly, thereby making it easy to read. Ideally, you should split your essay into appropriate, well-defined and well-titled sections.

• Have you fully and properly labelled all figures and diagrams?

• Have you explained all figures and diagrams in your essay? It is not enough to simply add diagrams to your work. You must also explain to the reader what each one means and the conclusions you draw from it.

• Are all words spelt correctly? Are all sentences grammatically correct? In general, it is good practice to use plain English rather than complicated expressions and complex sentence structures.

• Do all citations possess a corresponding entry in your References section? Are any entries in your References section uncited in your essay body? If so, they are bibliographic entries and will be penalised (see Marking Guidelines, above.)