Be sure to indicate what model you use (and alternative models that you don’t use or believe are inappropriate for the case at hand).
Graphs and equations never hurt – it’s even better if they’re the right ones for the problem at hand and the details are correct. (You still may pick up partial points…)
Wield jargon appropriately: budding economists avoid plain prose. Such obfuscation wins points, because it shows that you are a diligent apprentice [Lehrjunge], if not a full-fledged journeyman [Geselle]. (Tenured guild masters earn greater freedom.)
Illustrations and analogies to concrete examples reinforce the claim that industrial organization provides a framework for grappling with the complexity of the real world.
A. The basic model
• Draw the basic model of a firm with market power. Indicate equilibrium price, quantity, (gross) profit, CS, PS and DWL.
• Under what conditions might this represent a long-run equilibrium?
B: Vertical Issues
“Firms should vertically integrate whenever possible.”
C. Price discrimination & bundling
“Efficiency considerations drive the decision to charge different prices for beer by the case, in six-packs, in single cans and in kegs.”
D. Patents and Technology
“Once granted, patents should be subject to annual renewal, with the fee rising 50% each year.” Analyze the potential benefits might this policy bring, compared to our current one of a standard 20 year patent.
“Advertising in the beer industry is good for consumers and good for producers.”
F. Beer – choose one of the following
“As the beer industry illustrates, mergers never make sense.”
“Greater product differentiation is to the detriment of consumers.”