Economics 251 – Essay #1 – Summer 2004

These topics cover subjects addressed in Chapters 21 to 26 in the text. Choose ONE of the ten topics, which are introduced as news clips in the “In the News” and “World View” segments, or are defined in the text. . Your essay should summarize the topic, in terms of the concepts of economics of the chapter, and apply these concepts to articles that you have found on the topic. Your submission should be typed and no more than 3 pages double-spaced in total. As before, please attach your articles to your submission. The due date is July 21 at the beginning of the class.

Page 468. Web activities item number 3 outlines an exercise related to unit labor costs. Do parts (a) and (b) but do the exercise for annual data for the last four years for the U.S. Complete the same analysis for another western, developed country, for which you can obtain data. Compare the performance of the two countries. (articles not required for this exercise).

Page 475 – The “In the News” article profiles the problems that businesses face in very competitive industries in which entry is easy. Find one or two articles that further describe the challenges faced by business in such industries.

Page 487 - The “In the News” article illustrates the shut down decision, and the exit decision of two firms. Find one or two articles that describe the factors behind the decision to shut down, or exit and industry.

Pages 526 to 533 – The pros and cons of market power are discussed in the text. Find one or two articles that demonstrates how market power can either be positive or negative, using the text as a starting point to define positive or negative.

Page 534 – Consult the “Web activities” section, item number 3, and write an essay based on the articles you chose.

Page 545 – The “In the News” article shows the behavior of firms in an oligopolistic market. Sometimes price leadership works as a strategy, and sometimes not. Find one or two articles about successful and unsuccessful situations in making price increases “stick” in an oligopoly.

Page 552-553 – The concept of the cartel is discussed in the text. Find articles on cartels in the US (which are illegal), how they worked, and eventually failed or were discovered.

Page 554 – The “In the News” article describes how a firm, Frito-Lay, can erect barriers to entry and keep competitors out. Find one or two articles on other such examples.

Page 566 – The “In the News” article talks about the debate about the nature of computers. Are they a commodity (no variation among types) or are they a differentiated product, with distinct differences in quality and other features. Find another product where a similar debate is possible.

Page 570 – The “World View” article talks about the value of brands. Find one or two articles that describe how companies have been successful in creating a positive brand image, and how did they achieve it.