Microeconomics

Microeconomics
ANSWER
Microeconomics

QUESTIONS

Instructions

Purpose: This assignment examines the economic concepts and principles of ch. 9, 10, 11 as presented in the question set. The goal is to measure your comprehension of microeconomic policies on the different business models, the positives and negatives of each model, and how these impact business decisions, production, revenue, and profits. Also, regulatory oversight and anti-trust policies. Parameters: For this assignment, answer one (1) essay question related to ch. 9, 10, and 11.

 Your response should follow the parameters outlined in the attached question set. Your writing should be professional and conversational. Grade Points: 60 points Prompt: Complete one (1) question from the question set attached. Submit your completed report to the assignment submission link.
Question 1:
According to Chapter 11, “Public Utilities often operate as a natural monopoly.” (a) As a regulatory specialist at
TWW Co. you’re attending an in-house meeting and are asked to explain the impact of de-regulation on a natural
monopoly business. Describe your response including whether or not you agree with TXX Co. natural monopoly
business model. Explain one economic reason why you agree or disagree with the company’s current business
model. (b) After you’ve given your response, a colleague asks, “What regulatory options does TWW Co. have as
a natural monopoly”? Describe your explanation including the positives and/or negatives of each regulatory
option available to the company. (sure you wish this colleague was not at the meeting, but there’s always one at
every meeting). (c) back at your office, you see this note from your boss, “We need to discuss how TXX can
compete if the govt. decides to split the company. We should consider TXX rising operating costs (ie.
production, overhead, etc.), pricing mechanism, and possible raw materials shortages as market demand
changes.” Describe your response and include recommendations on how the noted factors will affect TXX
profits. (reference section 11.3 to respond to (c)).
Question 2:
As evident in week 6 readings, economic and policy challenges to eliminate pollution is costly. Your role: team
leader of Environmental Protection (EP) at ABC Inc. which is a partner co. of LNG International. (a) As the
team leader, you are asked about the following: (a) the U.S. govt. outlines a new set of policies that focuses
solely on market outcomes, what would be two major issues of this policy initiative for ABC Co.? Explain with an
example how each will be a setback for ABC Co. (b) Recently, you realize a potential side effect of trying to
eliminate pollution is that the company could run into major issues with the law of diminishing marginal utility.
You share this with your team as they prepare to work on the company’s latest report on EP costs, they ask you
to explain the law of diminishing marginal utility. Briefly explain the parameters of this concept; include an
example to show them how to differentiate marginal cost and utility. (c) your boss stops by your office with a new
concern. ABC Co. wants to move forward with fossil fuel production to align more with LNG International. She
asks that you prepare a memo on the benefits and negatives of deregulation in case there is a decision in favor
of deregulation. (ref. Section 11.4). She also mentions the company’s inefficiency with overall production to date
and asks if you could outline a couple of suggestions to curb this in your memo.
Question 3:
Please read ch. 9 & 10 before answering these questions. (*) there may be some overlap between ch. 9 – 10 on
this question.
During the mid-1970s, the Organization of Petroleum Exporting Countries, “OPEC” raised the price of oil
dramatically. At the time, many experts noted it is unlikely that OPEC could operate under this
intergovernmental unit over the long term. (a) Based on ch. 9/10 (*) briefly describes OPEC’s market structure
during the 1970’s? Do you notice a difference in OPEC’s market structure between the 1970s and 2021-22? Include
two reasons why the market structure of the 1970s either changed or stayed the same in your response. (b)
explain two reasons why oil prices were exceptionally high during the 1970s. Include one example for
each reason. Do you see any similarities between oil prices in the 1970s and in 2021-22? (c) According to ch.
9, pg. 224, “In the real world, a monopolist does not have enough information to analyze its entire total revenue
and total cost curves.” Would you say there is sound economic evidence available to prove that OPEC
does/does not have enough information to analyze revenue and cost from 2015 to 2020? Include your research
and explain how the data you present support the statement above. (d) Briefly discuss whether it is possible to
apply marginal analysis to illustrate the marginal costs and benefits of the OPEC monopoly business model.
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