ECON1048-Managerial and Business Economics Analyses – Economics Assignment Help

Assignment Task

Task 

1 Introduction
Decision-makers in government rely on the advice of experts when formulating policy or discharging their statutory responsibilities. In this assignment you will take the role of an expert economist, employed by a government department. An expert economist’s role in the government decision-making process is two-fold:

Analysis: Economists use their specialist knowledge and skills to analyse the likely outcomes of policy alternatives. They then evaluate these outcomes against the government’s objectives and statutory obligations.

Communication: Economists communicate their findings to ministers and senior public servants, who, in many instances, do not share their specialised knowledge.
This assignment will assess your aptitudes in both of these domains. You are to conduct an industry analysis based on the scenario detailed in section 2. Then use your analysis as the basis for a brief (a short report) summarising your recommendations and the associated rationale.

1.1 Formatting requirements
Your assignment must be typed using Microsoft Word, or a similar word processor. Both parts of the assignment should be included in the same document with the brief placed before the industry analysis. The document should have a professional appearance, appropriate to a government workplace. Format your assignment as follows:

• Use A4 sized paper with all margins at least 2.5cm.
• Body text to be 12pt and black. (There is no minimum line spacing.)
• All pages to be numbered.
• DO NOT include a cover sheet or table of contents.
• Optional: Save your assignment as a PDF to ensure that your document and equations appear as you intend.

1.2 Grading
There are a total of 100 marks available in this assignment (50 marks for the industry analysis and 50 marks for the brief), and the assignment contributes 40% of your grade for Managerial and Business Economics. The marks allocated to each step of the industry analysis are detailed in section 3. The marking criteria for the brief can be found in the rubric.

2 Scenario
The island nation of Autarka is growing concerned over the amount of rubbish accumulating in the waters off its coastline. This pollution is harming marine life, damaging fish stocks, and washing up on tourist beaches. Research by the National University of Autarka has determined that a significant component of the solid waste is the single-use plastic bottles used by soft-drink manufacturers. Currently, soft drink manufacturers in Autarka pay a tax of $0.40 on each bottle of drink they sell. The revenue from the tax is used to fund the cleaning of roads and public spaces. The scientific community is lobbying the government to increase the tax to $1.00 a bottle. The scientists suggest that any additional revenue could be used to fund programs to remove rubbish from the coastal waters.
There are two producers of soft drinks in Autarka: Bubbles PLC and CarbonCorp. The two companies do not face competition from imports as the cost of transporting soft
drinks into Autarka is prohibitively high. Moreover, there are no cost effective alternatives to single use plastic containers. The two companies have made submissions to the government opposing the proposed tax increase, which they claim will harm consumers.

2.1 Your task
The Minister for the Environment has instructed you to determine the likely impact of the proposed tax increase on the market for soft drinks, and to recommend whether or not the government should implement the proposed tax increase. Your recommendation should take into account

• the impact on government revenues from the bottle tax,
• the impact on consumers, and
• the impact on the environment.

Industry analysis

For your Industry Analysis you must complete each of the steps detailed below. When completing the steps you must:

• Type all equations using the ‘Insert Equation’ function (or equivalent).
• Show all of your working.
• Include sufficient written description for the reader to follow your process.
• Use appropriate notation and economic terminology.

3.1 Required steps
When completing the industry analysis you should assume that firms are engaged in Cournot Competition.

Step 1: Using the information provided in the scenario, derive a total cost function for each soft drink producer for the case in which the government levies a tax of $1.00 per bottle. Use QB to denote the quantity produced by Bubbles PLC, and QC to denote the quantity produced by CarbonCorp. Note that a firm’s marginal cost will be the sum of its cost of producing a bottle, and the tax that it must pay to the government on each bottle sold. 

Step 2: Using the cost functions from step 1, derive a profit function for each firm. 
Step 3: Derive each firm’s best-response function. 
Step 4: Solve the best-response functions simultaneously to find the equilibrium quantities for each firm. 
Step 5: Find the equilibrium price and tax revenue.

The brief
The purpose of the brief is to communicate your recommendations to the decision-maker who commissioned your analysis. You need to provide enough information for the decisionmaker to understand your recommendations, and to reach a decision on the matter at hand. 

However, senior government officials are extremely busy, so you must be brief.

• The maximum length for your brief is 2 pages.
• Any content in excess of 2 pages will not be read or graded. When writing the brief remember that it is for a non-expert audience. You must avoid using specialised economic terminology and state everything in ‘plain English’. For example:
• Terms such as consumer surplus, producer surplus, and deadweight loss, have little meaning outside of economics and should be avoided. (Note: This is not a comprehensive list.)
• On the other hand, the significance of terms such as price, revenue, and profit, are generally well understood outside of economics.

4.1 Template
You must compose your brief according to the template detailed on the following pages. Instructions for each required element of the brief are included within this template. These instructions are reflected in the requirements of the rubric for the task. Ensure that your brief includes each of the elements detailed in the template, and that you do not reorder, rename, or omit any of these elements.

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