BLAW1002 S2 2023
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BLAW1002 S2 2023 – EPA Brief
A. Context and Overview
‘Assessment 2’ is called the Economics Principles Analysis (EPA) and is worth 30% of the final mark.
EPA isa ‘take-home’ exercise with a set of tasks to do. EPA is based on economics topics M6 to M7. You will have eighteen (18) days to complete the EPA on your own.
Timeline of EPA-specific events (local time in year 2023AD):
1. EPA Brief on Blackboard (Bb), available: 9pm Monday 11th September.
2. Brennan Video Guide - Overview of EPA, available: 9pm Monday 18th September.
3. EPA is to be submitted on Turnitin by official due date: 11:59pm Friday 29th September. 4. ETA of marks/feedback on your EPA in Grade Centre: 9pm Wednesday 18th October.
The EPA will take up some of your thinking time, but this is a doable assessment!
As general guide on what the marker is looking for in the EPA is recalling the tutor- student discussions in the M6, M7 and M8 workshop sessions. Your tutor as an exemplar would have gone through the process on how best to explain the key economic diagrams, concepts and so on. The lecturer on the M7 topic might come in handy as well.
Key assessment information:
. EPA consists of two (2) compulsory parts, each worth 15 marks in total.
. Your answers need to be typed, but diagrams must be hand-drawn and included in the Word document or in PDF.
. For supporting information on EPA, refer to the following PDFs, available in Assessmentstab on Bb:
1) EPA Brief S2 2023
2) Marking Guidance for EPA S2 2023
3) FAQs for EPA S2 2023
. Note, the word count is a suggested maximum. The main thing is that you specifically answer the tasks and have sufficient explanations, and refer to key sentences and ideas from various articles where relevant to support your analysis.
Complete the tasks set out in this assessment brief by your human self -- no need for
you to share/upload it on the web for extra help. The lectures, set tutorial questions, and assigned readings within this brief and from the CORE text should be sufficient
resources for you to draw upon to do the tasks well enough.
Many thanks in advance for your cooperation, Brennan AI Tech Incorporated (BAT Inc.)
When ready to submit, ONLY include answers and prepare your document as following:
Full Name, Student ID and Tutor’s name as a title in the Word document (or PDF) to Turnitin by the due date (see Assessmentstab on Bb).
B. Assessment Tasks
Part 1 – 15 Marks
Demand for Levi’s Jeans
Consider the 150-year-old firm Levi Strauss. To give you some relevant knowledge and guidance for this task, read the following freely available articles (listed in chronological order for each subpart):
For a,
2. https://www.businessoffashion.com/articles/retail/can-levis-be-more-than-a-denim-brand/
3. https://www.businessinsider.com/levis-jeans-company-history-timeline-2022-11
For b,
1. https://sourcingjournal.com/denim/denim-brands/levis-chip-bergh-q2-2021-price-increase-wider-fits-premiumization-290050/ 2. https://www.just-style.com/news/levi-benefits-from-pricing-power-and-diversification-in-q4-2021/
For c,
1. https://www.cnbc.com/2023/07/06/levi-strauss-levi-earnings-q2-2023.html
a. Elaborate on two recent (past 3-5 years) strategies that might explain why Levi has not been swept away by the forces of a creative destruction.
400 ± 100 or so words should be sufficient
b. Suppose loyal well-to-do customers in 2021 and 2022 faced a 5% price rise in 501 jeans. Draw a straight-line demand curve and explain the relevant details on the price elasticity of demand
(PED) in this situation. Describe what would happen to revenue in this case.
[In your answer, use hypothetical incremental values (rough guesses from your imagination) for the prices on they-axis and quantities on the x-axis.]
250 or so words should be sufficient
c. Suppose low-income consumers facing significant cost-of-living pressures in 2023 heard that Levi Strauss lowered the price of 502 jeans by $10, from $70 to $60. Calculate PED for these price-
sensitive consumers in this situation. Describe what would happen to revenue in this case. [In your answer, use hypothetical quantities.]
200 or so words should be sufficient
Part 2 – 15 Marks
The Case of J&J and Changes to Drug Pricing of Treatment for TB
The world’s largest pharmaceutical market is the US. But there is social contention about the monopoly pricing strategies of big drug firms,e.g. see
https://www.forbes.com/sites/robertpearl/2023/01/31/pharma-companies-a-conglomerate-of-monopolies/
Consider the firm Johnson & Johnson (J&J) and the production of the drug bedaquiline to treat tuberculosis (TB), and its recent decision to cut the price of bedaquiline from $46 to $8 per month, as discussed in the following freely available articles:
1. https://www.washingtonpost.com/opinions/2023/05/16/multidrug-resistant-tuberculosis-treatment/ [go to ‘Reading List’ on Bb] 2. https://www.scientificamerican.com/article/how-advocates-pushed-big-pharma-to-cut-tuberculosis-drug-prices/
For this task, you will be required to illustrate and explain to atypical first-year undergrad student who has no economics background what has happened to profit (producer surplus), markup, consumer surplus and the output as a result of the price reduction.
To help you construct the relevant diagram, here are some instructions and assumptions:
. You will hand draw one (1) diagram with an isoprofit curve, which is an adaptation of Figure 7.9d from the CORE ESPP text. An adaptation means that you modify the main diagram from the text to suit the case study at hand, for the drug to fight TB. Assume unit costs of production of this drug area constant $5 per month.
. You are only required to draw one isoprofit curve with the profit-maximising price of $46. Be accurate when you draw your isoprofit curve, but there is no need to calculate with precision all the points on the isoprofit curve. Calculate and show workings of what the iso-profit would be for any price greater than $10 but less than $40 (pick anyone price but stick to an integer).
. For the incremental quantities of drug production on the x-axis, use hypothetical values (rough guesses from your imagination). Also use your intuition for making up other prices/costs of the drug on the y-axis and makeup a demand (straight-line) ‘curve’ .
. Calculate and show workings for the change in producer surplus and markup, but you only need to shade in the change in consumer surplus.
500 ± 100 or so words should be sufficient
2023-12-29