Students will be allocated one of the following firms:
i. A farming company specializing in wheat and barley production (Silo Pty Ltd). The firm is one of many producers in the international market.
ii. Dewey, Cheatem and Howe, a law firm specializing in compensation law. The firm is one of a number of local law firms.
iii. Spend-Easy, a retail chain specializing in the sale of white goods. The firm is one of four large white goods retailer's with a 20% market share in Australia.
iv. Ex Hoon Pty Ltd, a producer of auto parts, specializing in high tech safety systems. The company has recently patented a new technology that will revolutionize vehicle safety.
v. McMansion Pty Ltd, a housing construction business competing with a number of other construction firms in the State of Victoria.
Part A: In the assignment you are required to describe three factors influencing the market demand and three factors influencing supply curves for the chosen firm's product or service (e.g. how would a change in consumer income affect demand). You are also to explain the concept of price elasticity of demand and explain why you believe demand is elastic or inelastic in the long and short run.
Part B: Students are to illustrate and explain, using comparative statics, the impact of the following shock in the market in which the chosen firm operates.
i. A bumper harvest in the U.S. and South America increase the global wheat yield.
ii. There is a reported dramatic increase in the compensation claims going to court.
iii. A multinational white goods retailer launches a strategy to open 20 new stores in Australia.
iv. Ford to close its Broadmeadows and Geelong plants for which Ex Hoon Pty Ltd is a major supplier.
v. The construction industry faces a significant increase in labour costs.
Part C: Illustrate and explain with the market demand and supply curve the expected impact of a change in government policy on the chosen firm/industry:
i. The government introduces a tax on fertilizer used in agriculture due to runoff damages to rivers and streams
ii. Government disbands the Traffic Accident Commission (TAC), a publicly funded compensation scheme
iii. The government decides to increase GST from 10 to 15%
iv. The government announces tough new safety standards for all new vehicles sold in Australia
v. The government announces it will scrap the First Home Buyers Grant.
Last for the firm chosen; what is the market structure that the firm operates in? Why? For example, does in operate in a competitive market, is it a monopoly, or someone in between such as monopolist competition or oligopoly?