Micro Economics Question

College of Administrative and Financial Sciences

Deadline: End of Week 6 (13/8/2022)

Assignment 2

For Instructor’s Use only

Instructions – PLEASE READ THEM CAREFULLY

• This assignment is an individual
• The Assignment must be submitted only in WORD format via the allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented. This also includes filling in your information on the cover page.
• Students must mention question numbers clearly in their answers.
• Late submitted assignments will NOT be entertained.
• Avoid plagiarism; the work should be in your own words; copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) No pictures containing text will be accepted and will be considered plagiarism).

Submissions without this cover page will NOT be accepted.

Assignment Questions:                                                       (Marks: 15)

Q1. What is systems engineering and how has Elon Musk applied systems engineering to cut costs and increase profits? Are Musk’s innovations subject to competition, copycats, and creative destruction? Over the long run, how can Musk continue to generate economic profits? (5 Marks) [Ch. 6]

Q2. U.S. pharmaceutical companies charge different prices for prescription drugs to buyers in different nations, depending on elasticity of demand and government-imposed price ceilings. Explain why these companies, for profit reasons, oppose laws allowing re-importation of drugs to the United States. (2 Marks) [Ch. 7]

Q3. It has been proposed that natural monopolists should be allowed to determine their profit-maximizing outputs and prices, and then government should tax their profits away and distribute them to consumers in proportion to their purchases from the monopoly. Is this proposal as socially desirable as requiring monopolists to equate price with marginal cost or average total cost? Explain. (3 Marks) [Ch. 7]

Q4. Why is there so much advertising in monopolistic competition and oligopoly? How does such advertising help consumers and promote efficiency? How does advertising promote inefficiency? (2 Marks) [Ch. 8]

Q5. Why do oligopolies exist? List five or six oligopolists whose products you own or regularly purchase. What distinguishes oligopoly from monopolistic competition? (3 Marks) [Ch. 8]