ECON11026 Principles of Economics Assignment Sample

Here’s the best sample of ECON11026 Principles of Economics Assignment, written by the expert. 

Introduction:

In this study, it will be discussed that what kind of market competition have on the market as well as which market is perfect for the grain growing industry and supermarket & grocery industry. Further, it will also be discussed the different barriers in these industries for new entrants as well as also discussed the various models that are used in the market structure.

Under this study, the short run and long run profit or losses will be determined. At the end of this study, some areas like obesity, sugary drink taxes etc will also be covered related to health organizations in Australia.

Answer1.

Australian industry of grain growing is export-oriented. There are various crops such as wheat, canola, barley and other grains that are included in this industry. Australian grain growing industry has been represented high revenue instability over last five years which is affected due to unfavorable weather conditions. These conditions have impacted the local supply in Australia.

Other factors that contribute to revenue instability in Australian grain growing industry are variation in prices of global grain as well as supplies of the crop over the period (Vila et al., 2015). As per the growth of Australian grain growing industry, it is expected that the industry revenue will grow at an annualized 6.5% within the five years from 2016-17 and it would be at $ 17.0 billion.

Due to increased local grain prices than to input costs and a substantial volume of output, the profit margin has been increasing and this leads the improved economy of scale. Furthermore, Australian grain growing industry manages the low barriers to new entry.

Possibly two barriers can be count for this industry like the requirement of capital investment and issues in order to secure finance for this investment. In order to competition level and market shares, it can be defined that there are no such companies in this grain growing industry with a dominant market share (Magnan, 2015).

As per the short run and long-run profit maximization process, the companies in Australian grain growing industry use it to find out the output level as well as the price which will be helpful to return the increased profit while manufacturing a good or services.

Australian grain growing industry shows the economic efficiency of its market structure. Under grain growing industry, economic efficiency explains as improving the inefficiency and minimizing the wastage in order to serve its every customer with the help of optimal resources.

With the help of economic efficiency, Australian grain growing industry can serve its customers through the best products and resources so they can feel satisfied after taking the services or products. Companies try to serve their customers by providing scars resources to fulfill their needs (Hajkowicz et al., 2016). Economic efficiency leads the highest level of customer’s welfare that is possible due to available resources.

Answer2.

1. As per the research study, it can be defined that one of the most competitive industry is supermarket and grocery industry in Australia. The market structure of Woolworth describes the Australian supermarket and grocery industry in the best manner. Woolworth uses the oligopoly market structure to face the completion in Australian market (Price, 2016).

   Woolworth can determine as the supermarket giant that dominates the most of the Australian market and it also has a large market share in Australia. Oligopoly market structure can define the best Australian supermarket and grocery industry because in this structure have few firms dominate the retail industry.

2. There are different barriers that can be identified as the restrictions for new entrants in the retail Different barriers are a scarcity of land for new entries in the supermarket and grocery industry because the land is limited and this limited land have been taken by these huge players in this industry (Fernie, 2014). It cannot be said that the perfect market condition exists in this industry because there are barriers to new entrants.

3. Non-price competition can be explained as the market strategy, under this strategy companies try to differentiate their products as well as services to compete for the other products on the basis of design and workmanship etc. There are few giants in supermarket and grocery industry who dominate the market with their distinguish products (Anesbury et al., 2016). They distinguish their products by offering extensive distribution, quality of services, sustainable competitive advantages and customer focuses.

4. The kinked demand curve can be defined as the model that is used to explain the behavior of oligopolistic firms. Under this model, it is assumed that a business may face a curve of dual demand for its products that is depended on the other firm’s likely reactions for the change in another variable or its price. Further, this model defines that the products prices will be stable and the little incentive will also be there for the existing firms in order to change prices (Richards et al., 2016).

   This demand curve is beneficial for explaining sticky prices within the firms. Apart from this, it is also stated that this model has focused only the prices. Moreover, it also has the limitation related to original prices that are not set in this model. In against to this model, firms are often cut or increase the prices in the real

Answer3.

1. Monopolistic competition can be described as the imperfect competition in which various sellers sell their products which are different from other products and then this leads the no perfect substitute (Kumar and Deodhar, 2017). It can also be defined as those firms that take the prices which are charged by the competitors and they also ignore the impacts of their prices on another firm. In imperfect competition, there are various small firms those covers minimal shares of the market.

2. Monopolistic market competition conducts the huge profit margin in the short runs even then it is inefficient. Due to this, it is not able to attain productive or allocative efficiency. Under the monopolies, the suppliers are the price maker and perform likewise in the short-run. Due to the monopolistic competition, the businesses have the power on the competitive market which is similar to a monopoly (Dobes and Leung, 2015). The profit maximization level of manufacturing in the monopolistic competition will be the outcome as a loss of customers at the same time the surplus for the producer. This leads the deadweight loss.

3. The monopolistic market competition can also be explained as the economic market model, in which different sellers sell products that are similar but not identical (Teo et al., 2015). In short run, firms try to minimize the losses as well as maximize the profits with the help of production of that quantity at which the marginal revenue = marginal cost. If the production is not maintained at an equal level, this will erode the profit or losses.

4. In respect to the monopolistic competition, non-price competition defines the affords on the part of the firms in this competitive market in order to increase its sales and profit with the help of product distinction and selling expenses rather than cut the prices of their products (Imbs and Méjean, 2017). Firms that are used non-price competition in imperfect competition as market structure, can always change their product by changing their physical attributes and promotional programs.

5. There are various limitations in non-price competition in imperfect markets that are restricted the firms. Some factors like quality, perception and branding, product design, sales structure and product differentiation etc (Gabaix et al., 2016). These factors represent the upside for the firms that how this competition is beneficial as well as sometimes it also represents the downside.

Answer4.

1. Externalities can define costs or profits that do not reflect in the free market prices. Australian sugary drinks are very dangerous for the health which leads the heart attacks due to higher levels of glucose (Cherry et al., 2017). Its excessive consumption leads the negative externalities. Negative externalities are caused by the overconsumption of sugary drinks. Negative externalities are often related to costs of production, consumption and mixed externalities.

2. Private costs of obesity can be determined by the costs that are incurred for the private purpose. Privet costs of obesity differ from the marginal costs (Griffith et al., 2017). It is the cost which is expensed by the public for their personal care related to obesity. Apart from this, the third party costs of obesity can be explained as the costs that are paid by the third party. Under the third party payers include the insurance companies, governmental agencies, and employees.

3. As per the study, externalities can be defined as the consequences that can have negative or positive, of the activities of economic that are experienced by the third parties who are unrelated. Additionally, the sugary tax is determined as the tax or surcharge that is mainly designed to reduce the consumption of the drinks which have much quantity of sugar.

   The sugary tax is advocated by the medical associates and the world health organizations as an example of the taxation of Pigovian that has the objective to restrict the unhealthy diets as well as offset the economic costs of obesity that are continuously growing (Briggs et al., 2015).

4. Two sources are market forces of capitalization and provisos for non-rival and non-excludable goods which are responsible for the market For the forces of capitalization, the single-minded of laissez-faire often rises for crony capitalism that is used mostly in oligopolistic and monopolistic markets (Tietenberg and Lewis, 2016). In order to micro-economics, below-given a matrix of the categories of the service provided within the market is followed:

Conclusion:

After the study of this paper, it can be concluded that there are various factors that impact the market competitions as well as a various market structure that makes the business perfect for the market competition in Australia. It can also be mentioned that Oligopoly is the market structure that is often used by the Australian organizations which cover most part of the market.

At the same time, it can be stated that there are different aspects that are responsible for the market failure in Australia and they should also be resolved by the government to avoid the market failure.

References:

Anesbury, Z., Nenycz‐Thiel, M., Dawes, J., & Kennedy, R. (2016). How do shoppers behave online? An observational study of online grocery shopping. Journal of Consumer Behaviour, 15(3), 261-270.

Briggs, M., Webb, J., & Wilson, C. (2015). Automotive Modal Lock-in: The role of path dependence and large socio-economic regimes in market failure. Economic Analysis and Policy, 45, 58-68.

Cherry, T. L., Kallbekken, S., & Kroll, S. (2017). Accepting market failure: Cultural worldviews and the opposition to corrective environmental policies. Journal of Environmental Economics and Management, 85, 193-204.

Dobes, L., & Leung, J. (2015). Wider economic impacts in transport infrastructure cost-benefit analysis-A bridge too far?. Agenda: A Journal of Policy Analysis and Reform, 22(1), 75.

Fernie, J. (2014). 02 Relationships in the supply chain. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, 35.

Gabaix, X., Laibson, D., Li, D., Li, H., Resnick, S., & de Vries, C. G. (2016). The impact of competition on prices with numerous firms. Journal of Economic Theory, 165, 1-24.

Griffith, G., Baker, D., Fleming, E., Mounter, S., Malcolm, B., & Umberger, W. (2017). Chain Failure and Chain Goods: Re-thinking Value Chain Upgrading and Promotion in Developing Countries. International Journal on Food System Dynamics, 8(2), 146-154.

Hajkowicz, S. A., Reeson, A., Rudd, L., Bratanova, A., Hodgers, L., Mason, C., & Boughen, N. (2016). Tomorrow’s digitally enabled workforce: Megatrends and scenarios for jobs and employment in Australia over the coming twenty years. Australian Policy Online.

Imbs, J., & Méjean, I. (2017). Trade elasticities. Review of International Economics, 25(2), 383-402.

Kumar, V., & Deodhar, S. Y. (2017). FROM WELL-HEELED TO TIP-TOED, SHOE-SHINE TO SHOE-LACE: MONOPOLISTIC COMPETITION AND PRODUCT DIFFERENTIATION IN MEN’S FOOTWEAR. International Review of Business and Economics, 1(1), 1.

Magnan, A. (2015). The financialization of agri-food in Canada and Australia: Corporate farmland and farm ownership in the grains and oilseed sector. Journal of Rural Studies, 41, 1-12.

Price, R. (2016). Controlling routine front line service workers: an Australian retail supermarket case. Work, employment and society, 30(6), 915-931.

Richards, C., Kjærnes, U., & Vik, J. (2016). Food security in welfare capitalism: Comparing social entitlements to food in Australia and Norway. Journal of rural studies, 43, 61-70.

Teo, P., Bridge, A., & Love, P. (2015). Deriving optimal competition in infrastructure procurement. In ICCREM 2015(pp. 1114-1123).

Tietenberg, T. H., & Lewis, L. (2016). Environmental and natural resource economics. UK: Routledge.

Vila, T. D., Darcy, S., & González, E. A. (2015). Competing for the disability tourism market–a comparative exploration of the factors of accessible tourism competitiveness in Spain and Australia. Tourism Management, 47, 261-272.

________________________________________________________________________________