Part A assesses your understanding of some of the main ideas and techniques in game theory, which are mainly covered in Chapters 6 and 7. Game theory was also covered in Chapter 1, Section 6.2 and Chapter 4, Section 5.1. Online tutorials, particularly on game theory, will also provide some useful guidance. In Question 5, sequential games are discussed, particularly in Section 5 of Chapter 6.
Part B assesses your understanding of some of the main ideas in econometrics with an application to production functions. The questions ask you to demonstrate your data analysis skills using a dataset on firms. The variables in the dataset are provided in both original form and logged form.
Part B relates particularly to material in Part 1 of the gretl manual. Material on the neoclassical theory of production may also be helpful – see, for example, Chapter 5, Section 2. The skills covered in Part B include producing and interpreting summary statistics (covered in online tutorials in Block 1, Econometrics I: Using gretl to analyse data and Practice Exercises I). Part B also covers skills related to simple (univariate) and multiple (multivariate) regression analyses and the differences between the two, concentrating mainly on the interpretation of model coefficients. Multiple regression is introduced in the online tutorials Econometrics II: Bringing economic theory into data analysis – regression analysis and ordinary least squares, and Practice exercises II. Elasticities are covered in Section 8 of the online tutorial Econometrics II.
Part C asks you to write an essay examining a statement that argues that pharmaceutical companies should not face competition regulation because of the importance of the work that they do.
You are invited to discuss this statement using materials from Block 2 as well as drawing on the articles from the Competition and Markets Authority [CMA] and/or the articles from the Financial Times.
You should refer to at least one article in your essay. All extracts give evidence to support arguments on either side of the question. Chapter 5 discusses the concept of the perfectly competitive firm as well as issues related to production, cost and efficiency.
Chapter 5 also contrasts ideas of static and dynamic efficiency and theories of technical change which may also be relevant to understanding market processes. The tools for measuring economic welfare are a key theme in Chapter 7 as well as competition policy. The CMA articles also raise concerns related to anti-competitive behaviour, whereas the Financial Times articles may suggest that the position is more nuanced.
Learning outcomes
This assignment gives you the opportunity to demonstrate the following learning outcomes:
Knowledge and understanding
You should demonstrate a sound knowledge and understanding of:
the microeconomic theory of production, consumption and exchange at post-introductory level with applications the main features, strengths and weaknesses of standard neoclassical microeconomic theory and alternative theoretical approaches key ideas, theories and debates in microeconomic theory with applications to current issues in various areas, such as production, firms, and policy.
Cognitive skills
You should demonstrate the ability to: define and use key terms and concepts in economics construct effective arguments in analysing economic questions apply economic theories and models to analyse economic problems and events evaluate economic statements and theories use diagrams with verbal explanations of economic issues interpret qualitative and quantitative evidence, such as case studies and articles, and the results of regression analysis.
