Reference no: EM13108495

You need to provide a detailed economic analysis of the market you are looking at.

Prepare the project report on the basis of your answers to the question sets 1, 2 and 3. You should not submit the report in a ‘question-answer' format; however, all relevant discussions must be related to your answers to these questions.

Question set 1

1. Who are the consumers in the market you are looking at?

2. Who are the producers/suppliers in the market you are looking at?

3. How many economic activities can be seen in this particular market? Which specific goods/services are related with these economic activities?

4. What can you infer about the demand and supply elasticities in this market?

5. How many substitute markets you can think of in this context?

6. How many complementary markets you can think of in this context?

7. Apart from the consumers and producers, can you think of any other economic agent/ institution (like the government) who might play a crucial role in this market? If yes, how? If no, why?

8. Do you believe that the law of demand holds its validity in this market? Can you explain? Cite anecdotes/ real life observations/ empirical data to support your answer.

9. What are the equilibrium price and quantity in this market? Give real life numbers and provide references.

10. What can you infer about the relevant cross price elasticities and income elasticities in this market? Explain in details.

Question set 2

1. Describe the market structure? Is it perfectly competitive or monopolistic or oligopolistic or something else?

2. Describe the pricing strategy in this market. How does the supplier charge a price? How much price do they charge? Are the producers searching for a price or facing a set price?

3. How much quantity do they produce in each market? Can the producer serve the entire market demand (i.e. is there any capacity constraint from the producer's side)?

4. Do you see any role of the speculators in the market?

5. (For Housing market crisis): Why did the crisis take place? Can you relate the crisis with the pricing strategy?

(For all other teams): Given the market structure, do you think the pricing strategy taken by the firm (firms) in this industry is optimal? If yes, why? If not, why not?

6. Do you think a deadweight loss might exist in this industry? If yes, why? If not, why not?

7. Is the industry profit in this market is really high? If yes, why (would that attract new firms in the market)? If not, why not ?

8. (For Housing market crisis): Did too uncertain market environment led to this crisis? If yes, why? If not, why not?

(For all other teams): Discuss the uncertain market environment in this context.

9. Can you think of any positive or negative externality in the context of this market? Explain in details.

10. List 3-5 market characteristics in this context which you might not explain using the economic theory that you learnt in Econ 201.

Question set 3

1. a) Do you see any strategic interaction between any two consumers in the market you are analyzing? If yes, explain using a simple game theoretic framework. If no, explain why there is no scope of such strategic interaction.

b) Do you see any strategic interaction between the consumers and the producers in the market you are analyzing? If yes, explain using a simple game theoretic framework. . If no, explain why there is no scope of such strategic interaction.

c) Do you see any strategic interaction between any two producers in the market you are analyzing? If yes, explain using a simple game theoretic framework. If no, explain why there is no scope of such strategic interaction.

2. Can you think of any ‘adverse selection' problem in this particular market? Explain in details and specifically mention why it is an ‘adverse selection'.

3. Can you think of any ‘moral hazard' problem in this particular market? Explain in details and specifically mention why it is a ‘moral hazard'.