ECON1001 – Semester 2 – Written Assignment
This assignment requires you to examine ‘real-world’ applications of economics. Detailed instructions are provided below. When responding to the questions, use relevant economic models and concepts discussed in the course as they relate to the specified topic. Discussion outside the topics listed will be considered irrelevant. State any assumptions you make. It is critical that you set up a clear and logical discussion.
Read the following three articles (click on the link):
1. “Why you might be paying more for your airfare than the person sitting next to you” (Oct 2018)
2. “Algorithms and antitrust; Free exchange” (May 2017, available on Canvas)
3. “Ford EVs will use Tesla charging tech in surprise partnership between rival automakers” (May 2023)
Question 1 (Monopoly):
a. The first article is about price discrimination. Assume Qantas is a monopolist in the
Australian domestic airline market between Sydney and Adelaide. Ideally, Qantas would want to completely personalise prices to match the highest price consumers are willing to pay, allowing them to extract all consumer surplus. However, without perfect information, Qantas charges $300 for the flight at 11 am and $120 for the flight at 5 am. Use of a numerical example with economic reasoning, explain how this strategy can maximise Qantas’s profit? What conditions are required for this pricing strategy to be implementable? (5 marks)
b. Let’s assume that because of public outrage, Qantas decided to charge the same price for all flights. With the aid of a diagram, illustrate and explain what price Qantas will charge. Compared to part (a), are the consumers better off or worse, and why? (3 marks)
Question 2 (Oligopoly, Game Theory):
c. The second article discusses the app giving up-to-date information, saving consumers
from driving around, and helping the consumers to be more informative. With the aid of a numerical example, explain how the app may backfire. (5 marks)
d. The third article discusses the collaboration between Ford Motor and Tesla on charging initiatives for its current and future electric vehicles in an unusual tie-up between the two rivals. Explain whether companies should adopt to a single charging protocol or develop their own charging ports. What factors they should take into account? (5 marks)
The following criteria relate to the entire assignment:
• 2 marks - Clarity of expression (including grammar and spelling), presentation (including, but not limited to, formatting, numbering and clarity of graphs, tables, charts or figures if used), communication (including appropriate vocabulary) and structure (including use of paragraphs and headings)
Assignment Guidelines
1. The written assignment is a maximum of 700 words long (for the whole assignment, not individual questions, +10% lenient allowed), not including a reference list, diagrams, and game matrix. Headings and subheadings (e.g., based on the questions posed) are allowed to structure the assignment. Students need to indicate the word count on the assignment itself.
2. You are NOT allowed to use Chatbots or content creation (e.g., ChatGPT, Gemini,
CoPilot … etc.) to help with your work. Using those AI tools violates academic integrity, and you will receive zero for the whole assignment.
3. When responding to these questions, you should use relevant economic models and
concepts covered in the topic specified to answer the question. Discussion outside the scope of the topics listed will be considered irrelevant. State any assumptions you make. It is critical that you set up a clear and logical discussion.
4. You must back up your statements with logical reasoning and supporting evidence if possible.
5. You need to use appropriate language and submit a professional piece of work. Avoid slang or colloquial terms, check spelling and grammar.