ECO202 (Economic Ideas and Models for Business): Group-based Assignment

Module / Subject / School

ECO202 Economic Ideas and Models for Business
Singapore University of Social Sciences
Group-based Assignment

Requirements

Question 1

Consider a product which is a necessity with demand and supply functions given as P = 20 – 0.05Q and P = 10 + 0.05Q, respectively, where P is the price in dollars and Q is the quantity. The government wishes to implement policies to lower the price paid by consumers for the product to help low-income consumers. One policy is to impose a price ceiling below the market equilibrium price and the other policy is to provide a subsidy to the consumers.

(a) If the government implements a price ceiling of $12 on the product, appraise the welfare of consumers, producers and society as a whole with the market equilibrium outcome. Explain your answers with a suitable market diagram.

(b) If the government provides a $6 per unit subsidy to the consumers, appraise the welfare of consumers, producers and society as a whole with the market equilibrium outcome. Explain your answers with a suitable market diagram.

(c) Compare between a price ceiling and a subsidy that results in the same price paid by consumers. Comment on the winners and losers under the two policies.

Question 2

(a) Two fishermen, X and Y, have to decide whether to catch prawns at North Sea or South Sea and then sell their catch in the same market. It costs $5,000 for a trip to North Sea and $3,000 for a trip to South Sea.

If both catch prawns at North Sea, each can catch 1,500 kg.
If both catch prawns at South Sea, each can catch 2,000 kg.
If one catches at North Sea and the other at South Sea, the one at North Sea catches 2,000 kg while the one at South Sea catches 3,000 kg.

The price of prawns depends on total supply:

$18/kg if total supply is 3,000 kg
$12/kg if total supply is 4,000 kg
$10/kg if total supply is 5,000 kg

(i) If both fishermen make decisions simultaneously, construct the payoff matrix in terms of profit. Apply the simultaneous game concept to solve for the Nash equilibrium. Analyse whether the game is a prisoner’s dilemma.

(ii) Fisherman Y can invest in a new technology that increases catch by 300 kg regardless of location. Assume market price is not affected by the increase in total supply. Construct the new payoff matrix, solve for the Nash equilibrium, and determine the maximum amount Fisherman Y is willing to pay for the technology.

There are two views on competition. One view is that competition promotes efficiency and increases welfare. The other view is that competition results in inefficiency due to wasting resources and reduces welfare. Present a market regime where competition incurs inefficiencies and does not maximise welfare. Examine this market regime and explain why competition is not beneficial. Support your answer with a suitable diagram.

What We Score

Our Writer’s Comment

This assignment tests applied microeconomics and game theory.

Common issues we see:

Incorrect equilibrium calculations. Errors in solving for equilibrium price and quantity affect all welfare results.
Weak welfare analysis. Surplus changes are described but not clearly linked to diagrams.
Confused game-theory logic. Payoff matrices are constructed incorrectly or Nash equilibrium is misidentified.
Poor diagram use. Diagrams are missing labels or do not match the written explanation.

High-scoring scripts are precise, structured, and mathematically consistent from start to finish.

How to Improve Your Score for This Assignment

Show full workings. Clearly derive equilibrium, surplus changes, and payoffs.
Use clean, accurate diagrams. Label curves, prices, quantities, shortages, and welfare areas properly.
Be explicit in comparisons. Clearly state who gains, who loses, and why under each policy.
Apply game theory correctly. Identify dominant strategies, Nash equilibrium, and prisoner’s dilemma conditions explicitly.

Strong submissions demonstrate technical accuracy and clear economic intuition.

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We check calculations rigorously. Equilibrium, welfare, and payoff matrices are verified step by step.
We refine diagrams. Market and game-theory diagrams are accurate and examiner-friendly.
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