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ECON 1194 Assignment 3 – Part 1
Time limit: 10 minutes ‐ Submission deadline: May 22nd 2023, 23:59 (GMT+7)
(Each day late of submission leads to a 10% of total maximum marks, i.e., 45 x 10% =4.5 mark deduction.
Students need to submit slides via Studio and also submit Powerpoint file)
The video should have all members participating and presenting answers, with ppt slides and
students’ faces).
Question 1 ‐ Market characteristics (10 marks)
Discuss the key characteristics of only ONE market that you are assigned:
‐ Korea Pasta and Noodles
‐ China ‐ Broadcasting & Cable TV
‐ Indonesia Dairy
‐ Japan – Confectionary
Your discussion should consist of the following: market concentration, product differentiation
and barriers to entry.
Based on the discussion, what type of market structure do you think fits with your industry (ie.
competitive markets or monopoly or oligopoly)?
Sources: While you will find most useful information from the industry profiles from the database
MarketLine (browse for it in the library link https://rmit.libguides.com/companyandindustryinfo)
for your analysis, you can use additional reference sources (from news articles, academic journals
or governmental websites from other sources) for any further industry and firm data if necessary.
The reference sources need to be relevant, reliable and recent (say in the recent 3 to 5 years).
Question 2 ‐ Market structures and costs review (12 marks)
Out of your team, each member has already worked in one industry (motorbike parking/nursery
schools/pho restaurants) in Assignment 2.
a. Create a list of all markets that individual members have already worked on in Assignment 2 and
also the case that your team are assigned in this Assignment. Compare and contrast these very
different industries in terms of key costs, level of competition and profits.
b. Discuss whether in each industry, economies of scale, diseconomies of scale or constant return
to scale is prominent, and explain why, with supporting arguments (and data where applicable)
c. Explain how the cost structures discussed in part (b) are related to market structures in part (a)?
Specifically, how economies of scale, diseconomies of scale or constant return to scale help to
explain the type of market for each industry in your list.
(4m+4m+4m=12 marks)
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RMIT Classification: Trusted
Question 3 – Advertising or not? (10 marks)
Pick the 2 biggest firms in the assigned industry in question 1.
a. Based on dominant strategy, discuss how either of them choose the strategy to advertise or not.
You should build a matrix, identify players, strategies, and corresponding payoff in your
discussion (you can put give qualitative estimate /hypothetical numbers for payoffs). Identify
the Nash equilibrium and the implication for firms and society. Discuss if there is a better point
for both firms and if that point is feasible to achieve or not.
b. Gather some key information about advertising activities of these 2 big firms (e.g advertising
expenditure, key slogan, campaigns, results in raising market share/awareness...).
c. Evaluate the pros and cons of advertising, from society’s point of view. Your evaluation should
be based on economic concepts throughout different topics of the course.
(4+2+4=10 marks)
Question 4 – Market failures (8 marks)
Information failures, externalities and public goods are the three common types of market
failures. One industry of a good/service may have one or more than one types of market failures.
a. Investigate ONE possible market failure existing in the assigned industry in question 1.
Make sure you explain the inefficient market outcomes in the industry. Particularly,
‐ If you believe the industry of your choice has information failures, make sure you
discuss the adverse selection or moral hazard problem that may likely occur in the
industry.
‐ If you believe the industry of your choice has externalities, make sure you discuss the
under‐allocation or over‐allocation problem of the private market against the socially
optimal outcomes that may likely occur in the industry.
‐ If you believe the industry of your choice has public goods, make sure you discuss the
problem of non‐excludability or non‐rivalry (i.e. the property rights of the good is not
well defined or enforced) and possible free‐riding problem that may likely occur in the
industry.
b. What public or private solutions to mitigate the above market failure would you suggest?
Find evidence of real efforts to solve the failure.
You are expected to do research for literature or facts/figures as supporting evidence of the
market failure in the assigned. You can use graph illustrations where you find necessary.
(5+3 = 8 marks)
Remaining 5 marks are awarded for the quality of the video presentation
Total: 10 +12 +10 + 8 +5 = 45 marks
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