Problem 1: PRICE MAKERS - Big Pharma companies in the US (E2)
In extremely competitive markets it is impossible to make much profit. The most profitable industries are those with significant degrees of monopoly power when firms have the power to raise prices without losing too many consumers. Drug companies in the US are an example of firms having substantial pricing power, according to this article (attached)
Based on this discussion and economic theory, draw an appropriate diagram of the profit-maximising firm using a relevant demand curve to illustrate and explain in some detail the monopoly power of pharmaceutical companies in the US. Refer to key sentences and ideas from the article where relevant to support your analysis.
Problem 2: PRICE TAKERS - demand and supply for macadamias in Australia (E2) consider the competitive market for macadamia nuts in Australia, according to this article (attached)
Use relevant demand and supply diagrams to demonstrate the current state of the market and the likely future scenario of macadamia nut prices in Australia. Carefully label the curves and clearly indicate the equilibrium prices in the current scenario and future scenario.
Problem 3: MARKET FAILURE - delivery workers in the What are external effects? Consider the importance of US delivery workers in the coronavirus pandemic, according to this article (attached)
Based on this discussion and economic theory, draw an appropriate diagram to illustrate and explain this specific type of externality. Demonstrate on your diagram and discuss what would be a suitable government policy to help solve the market failure in this case.
Problem 4: MARKET FAILURE - packaging in the UK (E3) Consider the external effects of soft-drink packaging on UK beaches, according to this article (attached)
Based on this discussion and economic theory, draw an appropriate diagram to illustrate and explain this specific type of externality (assume the market is competitive). Demonstrate on your diagram and evaluate what would be a suitable government policy to help solve the market failure in this case.
Attachment:- Application of Economic Principles.rar