Economic Principles

Case Study – Group (Research Based)

Length 2 000 Words

Learning Outcomes

b) Analyse the impact of industry competition on individual businesses.

d) Analyse the impact of monopolies and monopolistic competition within an industry.

e) Evaluate the impact on industry of manipulations of economic factors by the public sector.

Context: Assignment 3 assesses students’ understanding of the concept of market failure and allows them to critically evaluate the involvement of the public sector in minimising the adverse effects of market failure to society.

Instructions: In groups of 3 students you are expected to choose one of the following Australia’s industries: energy market, dairy industry, housing market, grocery retailing and private health insurance. Prepare a 2 000 word research report which addresses the following:

(a) Critically evaluate the industry that you have chosen and suggest with reasonable justification the market structure it belongs to. The market structures discussed in class are perfect competition, monopoly, monopolistic competition and oligopoly.

(b) The perfectly competitive model which presents the price system as a basis for efficient allocation of resources in economies has been found not to work resulting in producing a phenomenon referred to as “market failure”. With reference to the industry you have selected, review it and identify characteristics of market failure from economic theory that are relevant to that industry.

(c) Specifically highlight and discuss the undesirable consequences to society as a result of market failure in the selected industry. Do not generalize, be specific.

(d) Critically evaluate what the government or quasi – government sector has done to address the negative effects of market failure that you discussed in (c) above.

(e) Comment on whether you agree or not with the statement, “market failure only occurs in developing economies and not in developed economies”.

In addition to the above you will also be assessed on the following: (see marking Rubric at the end for more description of expectation).

(f) Content Audience and Purpose

(g) Critical reasoning, presentation and defence of an argument and/or position

(h) Analysis and Application with synthesis of new knowledge

(i) Use of academic conventions and sources of evidence

(j) Effective communication

(k) Peer Review