Does this article discuss the demand or supply side of the market? Elaborate on in at least 200 words the factor affecting demand/supply as mentioned in the above case study. (5 marks)

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Department of Economics

Semester 1 : Year 2021

ECO 202: Microeconomics II

Individual Assignment: 40%

Instruction

The Individual Assignment comprises two parts:

Part I: Multiple Choice Questions (15%)

This assessment wil l have thirty (30) Multiple Choice Questions from Weeks 1, 2 3 and 4 of the lecture notes and

45 minutes will be given to answer the questions. This assessment will be conducted on Wednesday (23/06/21)

from 8.00 p.m. – 8.45 p.m.

Part II – Research Project (25%)

The assessment will have two sections whereby the first section is on case studies (15%) and the following section

is on essay writing (10%) . The assessment is due on (27/06/21) at 11.55p.m . The essay must follow the traditional

format, that is, introducti on, body and conclusion. It must be more than 500 words in limit and not exceeding 1500

words with font type Times New Roman and font size 12 with 1.5 -line spacing. Do not include the question in

your answer sheet as it will increase the Turnitin score.

Use Harvard style referencing to provide the in -text citations and references. You are requ ired to provide proper

acknowledgement of work/ideas borrowed from others. Improper acknowledgement of others work will result in

some penalty points. The assessment will be subject to Turnitin, therefore the similarity index must not exceed

20%. Only orig inal and individual work is to be submitted.

You may use the URL provided below to access a video from YouTube which will help you with the in -text

citations and referencing your work by using the MS Word references feature . Note the style must be in Harva rd

format (Harvard -Anglia XXXX) in MS Word :

URL: https://www.youtube.com/watch?v=duauCfADpE8 2

Case Study 1 (10 marks)

Questions on Case Study 1

1. Does this article discuss the demand or supply side of the market? Elaborate on in at least 200 words the

factor affecting demand/supply as mentioned in the above case study. (5 marks)

Your beard is killing the shaving industry

By Drew Harwell

As participants in “No Shave November” and its mustachioed counterpart, “Movember,” men across America will dedicate this month

to keeping sharp objects away fro m their five o’clock shadows or bushy beards. But for a growing number of them, this month won’t

feel that different. American spending on shaving razors and blades fell last year, to $2.3 billion, for the first time since the recession.

Shavers, analysts said, are sick of spending more money every year on different combinations of tiny knives. “Men, tired of putting up

with the ever -increasing prices of refill shaving heads from the top producers, have fled to cheaper options,” analysts with consumer

resea rch firm Euromonitor wrote recently. “Some have even stopped shaving altogether.”

It’s a scary prospect for traditional shaving companies. But for those with brands outside the blades business, it comes with an

unexpected side benefit. Last year, men’s ski n care saw faster growth than any part of the broader men’s grooming category, with sales

rising 7 percent to more than $260 million, which Euromonitor analysts said was “a marked indicator of the changing nature of men’s

grooming.”

Another sign of the inc reasing metro -ification of American men? Maybe. Men, analysts said, are becoming seemingly less hesitant at

spending toward their personal style. The unshorn lifestyle is also accepted in today’s more relaxed workplaces, which don’t ban

whiskers as often a s in the traditional corporate milieu.

“Facial hair is a lot more acceptable now, especially in the workplace. It’s no longer required that everyone shave every sin gle day,”

said Gabriela Elani, a personal care analyst with market researcher Mintel. In a s urvey last year, she said, just half of men said they

were daily shavers.

Since 2012, the U.S. market for replaceable shaving cartridges has dropped by $85 million, while disposable razor sales have

grown by $23 million, Mintel data show. Men of all ages a re switching to cheaper shaves, including subscription start -ups like Shave

Mob, Harry’s and the socially savvy Dollar Shave Club, which sells five cartridges of its basic blade, the “Humble Twin,” for $1 a

month. The company is on track to earn $60 millio n in revenue this year, three times as much as in 2013.

Some companies think men are willing to pay more for their shavers, they just want to know they’re getting something for the extra

price. Shaving giant Gillette, which spent $750 million in the late ‘ 90s designing and building its Mach3 razor, has

unveiled versions of its industry -leading Fusion ProGlide that include power razors, precision trimmers and swiveling “Flexball”

heads. Last year, sales of the ProGlide line still fell to their lowest point s ince 2010.

Meanwhile, the men’s “personal care” market, including shower gels, skin creams and hair care products, has grown 15 percent since

2008, to $3.9 billion last year , Mintel data show . Stalwarts of the cosmetic aisle are, for many men, increasingly becoming

routine: About 60 percent of men between 18 and 34, and about 30 percent of men over 65, said they use a face moisturizer.

There are still a few predictable obstacles keeping men from tending to their skin, analysts said, including everything fro m worries

over their manhood to simple laziness. Some companies are trying to gloss over the beauty factor of their skin -care products by

linking them to shaving, selling handfuls of post -shave butters, moisturizers and “repair serums.”

It’s not just young men powering the industry, but old men who want to look like young men — or at least have the money to try. “Men

who can afford to look good can be seen flocking to premium men’s grooming products in order to maintain an aura of youth and

energy,” Euromo nitor analysts wrote. “As baby boomers grow older but still compete with men of all ages for jobs and romantic

partners, they will continue to spend what they can to look as good as they can and advertise their worth.”

Source: The Washington post

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2. Discuss in at least 200 words the strategies developed by some of the firms to attract more customers to

their produ ct. (5 marks)

Case Study 2

How th e Meat Industry Keeps Chicken Prices High?

by Christopher Leonard

A handful of companies are so powerful they can raise meat prices with a single decision —no collusion necessary.

Today’s meat industry is a technological marvel. The inside of a modern -day p oultry slaughterhouse looks like a hellish version of Willy Wonka’s chocolate factory. Chicken carcasses spin along automated disassembly lines, chopped and sliced and cooked by machines that can turn 1 million b irds a week into frozen packages of nuggets that are stacked on pallets and shipped around the nation. But this technological sophistication is deceiving. In fundamental ways, the meat business has returned to the state where it was 100 years ago, a time when just four companies controlled the marke t with a shared monopoly.

Four companies make 85 percent of America’s beef and 65 percent of its pork. Just three companies make almost half of all chi cken. These figures even understate the reach of the modern meat monopoly, which includes companies like Tyson Foods and Cargill Inc. Today’s meat conglomerates control the food system in a way that that old -school companies could only dream of. Companies like Tyson Foods have pioneered a new model of food production that gives the m ownership and control over virtually every stage of the business.

In the chicken business, for example, Tyson Foods owns the breeding company that determines which birds are raised, the hatch eries where chicks are born, and the chickens that it delivers to contract farmers who rais e them. It owns the feed mills that fatten the birds up, the slaughterhouses where the birds are processed, and the trucking lines that deliver the meat. Tyson Foods has finally answered the age -old question: Before there is the chicken or the egg, there i s a multinational meat corporation. This tightly integrated model has become the norm in pork production and also allowed companies like Tyson to co rner the beef market.

The results of this consolidation have been predictable. Meat prices are climbing rele ntlessly. Farmers are earning a steadily smaller share of every dollar that consumers spend on meat. The profit margins of the nation’s biggest meat packers rose dramatically between 2008 and 2010 (the most recent year for which good data is available), ev en as the national economy cratered. Tyson Foods, the nation’s biggest meat company, reported record profits of $778 million last year as the company hiked prices for beef, pork, and chicken. Last Friday, the company’s stock closed at $39.45 per share.

At the heart of these profits is Tyson’s ability to reach broadly across the national markets for beef, chicken, and pork. Perha ps no man understands that reach better than Donnie Smith, who is CEO of Tyson Foods.

At the same time, consumer demand had fallen through the floor. Americans weren’t eating at restaurants or buying Tyson’s chicken nuggets at the grocery store. For the first time since World War II, per capita chicken consumption wasn’t growing on a year -over -year basis. For 50 years, the economic un derpinnings of the U.S. economy had been breaking in Tyson’s favor. But now that Smith was almost in charge, the tide of history was going the other way.

More importantly, the teams used sophisticated software programs to predict how much meat the big clie nts would buy during the next 180 days. The November supply chain meetings showed that Tyson was dumping far too much fresh meat into the market. Inventories were building up, and the c ompany was forced to sell chicken at a massive discount to traders, who turned around and unloaded the meat onto global commodity markets.

Ultimately, Tyson cut its production by 5 percent in December. Around that time, the industry as a whole was estimated to hav e cut back the placement of new eggs between 6 and 7 percent.

In a matter of weeks, the price of a boneless, skinless chicken breast rose by about 20 cents, according to an industry estima te. Within a short few months, Tyson’s chicken business was profitable again.

What was remarkable about this plan was the fact that Tyson executives could even consider it. Decades of lax antitrust enforcement allowed Tyson Foods to buy most of it competitors, giving executives at company headquarters the ability to control production on thousands of farms and doze ns of major poultry plants across the nation. In 2008, Tyson Foods and its competitor Pilgrim’s controlled more than 40 percent of the national market. The third -biggest company controlled just 8 percent. Modern American farming was run out of the central office.

Because Tyso n owns and operates so many chicken factories, collusion isn’t necessary for massive production cuts. The result can be achie ved in the kind of supply chain meetings that Donnie Smith attended in 2008.

Production cuts and meat price hikes seem to have bec ome central to Tyson Foods business plan. In the 1960s, no single poultry company had enough market share to be able to cut supplies enough to raise prices. Today, they do. Last year, Tyson Foods raised prices for beef, pork, and chic ken even as grain pric es fell. All signs indicated that the big four meat producers plan to do the same thing this year.

Source: Slate

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Questions on Case Study 2 (10 marks)

1. Describe in at least 200 words the type of market structure mentioned in the above article and discuss its

features. (5 marks)

2. Elaborate on in at least 200 words how consumers are affecte d by the actions undertaken by these firms in

the industry as described in the case study . Provide a local example if applicable to this scenario . (5 marks)

Essay (20 marks)

Choose a topic from the below options to write an essay (more than 500 words but not exceeding 1500

words)

Essay Topics:

1. Property rights and the process of bargaining can shift economies to efficient output levels, regardless of

who is assigned the property rights. Use an example to discuss this statement. Your discussion should

show how efficient outcome is reached with property rights assigned to either group.

2. Use the Lindahl Equilibrium model (model/graph can be copied and pasted from the lecture notes) and

discuss how this approach can be used to provide public goods.

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