Ec 4550-Tansey
July 17, 2016
ASSIGNMENT 5 (Due ***July 12 2011***)
MARKET STRUCTURE MEDIA EXERCISE
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This assignment will help you to:
Demonstrate written communication skills by articulating and supporting ideas using
appropriate economic terminology
Develop the capability for studying and turning in assignments PAPERLESSLY.
Evaluate the role and effectiveness of government in the economy
Articulate differing value systems and their relevance to different economic paradigms.
Acquire the habit of reading quality media often and critically
Analyze price and output decisions for the eight market types using competitive analysis
and an understanding of vertical relationships among markets.
Effectively grasp appropriate economic methodology.
Use elementary microeconomic theory and models to understand buyer and seller
behavior in both the product and resource market.
Apply microeconomic theory and models to current events.
Analyze various industry structures and evaluate their effects.
Find your own article (to be done individually) with which to construct a supply (vertical)
chain around a market which is threatened by an event reported in the article. The
ARTICLE MUST HAVE APPEARED IN THE MEDIA AFTER THE FIRST DAY OF
CLASS DURING THIS SEMESTER-i.e. June 1, 2011.). After choosing the event,
organize your paper according to the following outline:
A.
On the answer sheet (see below ((you can lift that right off these instructions and
put it into Word Perfect OR powerpoint)) ) set up the supply chain that will
show how your market is threatened by the event you have chosen.
(a) Carry the supply chain all the way down to the consumer and all the way
back to the original resource (land, labor, or capital). You should be able to
trace one product or service through the whole chain. Each additional market in
the vertical chain will add another participant. Circle the names or description of
each of these participants or markets that you can find in the article.
(b) There should be at least three participants; (i) the seller in the first market,
(ii) the buyer in the first market who is also the seller in the second market, and
(iii) the buyer in the second market. Who pays the money should determine the
buyer and who provides the good or service in a transaction should be
considered the seller. Each additional market in the supply chain will add
another participant.
(c) Each of the participants must take title to the good or service and each
market must have a buyer and seller who make an arm's length transaction.
BI.
In the mounted article you turn in UNDERLINE (not more than a sentence)
mention of the one single event that affects the entire supply chain.
(a)
In the market where the event first has its impact, circle the letter of the
appropriate shift on the answer sheet:
"A" represents a leftward (upward) shift in supply.
"B" represents a rightward (downward) shift in supply.
"C" represents a leftward (downward) shift in demand.
"D" represents a rightward (upward) shift in demand.
(even if a single event affects several markets, define the event narrowly
enough to have its initial impact in only one market- remember ceteris
paribus!!! Sometimes, if the initial event involves a specific participant
in your chain there may be two markets initially impacted when the
participant is both a buyer in one market and a seller in the immediate
downstream market.)
(b)
To indicate the vertical impacts of the initial event, place "X"'s on the
answer sheet over the appropriate letter in the rest of the markets in your
supply chain. These X's should be placed in accordance with the
following rules for shifts of derived demand and supply shifts due to
changes in supply determinants (i.e. resource prices and availability).
RULES for VERTICAL DEMAND and SUPPLY SHIFTS
Determinants of supply and demand:
1. A higher price of resources shifts the supply
curve upward.
2. A lower income of buyers (total revenue if firms are
buyers) shifts demand downward.
Implications:
1. A demand shift causes a demand shift
in the same direction for all upstream markets.
2. A supply shift causes a supply shift
in the same direction for all downstream markets.
3. A change in price or quantity in any market translates
into supply shifts in downstream markets.
4. A change in price or quantity in any market translates
into demand shifts in upstream markets.
Every market must have a shift that is circled or have an X, but no market should have
more than one circle (or “X”).
C.
On your answer sheet describe each market as monopoly, oligopoly,
monopolistic competition, perfect competition, monopsony, oligopsony,
bilateral monopoly, or bilateral oligopoly. Support your description first by
deciding:
(a)
What aggregation you are examining? Industry? Product? Product line?
Generally this is implied by the name of the item in your study.
(b)
(c)
(d)
Number of:
Buyers
Sellers
What is the size of the market? Decide if it is international (“I”),
national (“N”), regional (“R”), statewide, or local (“L”) and circle the
appropriate category on the answer sheet. Pertinent evidence includes
the amount and distance in which goods are shipped, the extent of
advertising (national T.V.? Local T.V.? Radio? National newspaper?
local newspaper? etc.), mobility of buyers, availability and economics of
transport, information on the distance between competing firms, and the
location of firms. Generally try to pick the widest market boundaries
that evidence can possibly support. Circle the letter of the appropriate
market size on the answer sheet
Is there product differentiation? Circle “Y” if there is and “N” if there
isn’t. This determines whether there is monopolistic competition or
perfect competition for a competitive market.
How many buyers and sellers there are in the market area? Circle on the
answer sheet “m” if there are many, “f” if there are few, and “1” if there
is only one firm in the market place. Do this for both the buyers and
sellers in a market. Here's a table to keep it clear:
Monopoly
Many
One
Oligopoly
Many
Few
Competition
Many
Many
Monop
sony
One
Many
Oligopsony
Few
Many
Bilateral
Monopoly
One
One
Bilateral
Oligopoly
One/few
One/few
Your article must have a citation (page, date, title of news source), must
be sent electronically and must be neat or the internet site and the date
for the media article you have used.
There is an example of this assignment at the website
cte.rockhurst.edu/tanseym
Participants
Product
(m=many,f=few,1=one) Type of Market SHIFTS OF:
Differentiation SELLERS BUYERS (eg. Monopoly, SUPPLY DEMAND
competition,etc) Left Right Left Right
I=international,N=national, (Y= yes, N=no)
R=regional, L=local
Seller
Markets
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Circle one for each
market
Circle One Circle
One
Circle
One
Write down
one market
Type
Circle One of the
four possibilities
By the way if you want to use the above template. Just get into power point (or WORD),
select it (by clicking on the template above so that you can see the four dots on the
corners) and paste it onto a powerpoint slide or onto a WORD page. In Word you can go
into VIEW, TOOLBARS, and DRAWING to insert a textbox over the template to write
over the template (you’ll need to choose a clear background for the textbox to be able to
see through it- talk to the professor about how to do this).