Econ article

ECON 152 Article Analysis Leeds

Due date: November 29, 2020; there is a 3-pt penalty for each additional day

If you turn in your assignment by midnight on November 24, you will have an opportunity to fix some mistakes.

The purpose of this assignment is to review Chapter 4 and apply it to a real-word situation. It has five parts:

Part I. Find a newspaper article, about 500 – 1000 words, that reports changes in the equilibrium prices in a specific relatively competitive market, such as aluminum or soybeans.  Alternatively, the article may describe a disequilibrium in a market. The article must be from this or the previous year (2020 or 2019).

Note 1: Do not give me economics exercises from the web or journal articles of thousands of words. The purpose of the assignment is to analyze current economic events.

Note 2: A single product, such as Ford Mustang, does not represent a competitive market. It is a monopoly, and you must use the monopoly model if you wish to analyze it, which I will accept with appropriate graphs. Recall that the monopolist does not have a supply curve.

Note 3: See the next paragraph regarding the required supply or demand shifts.

Part II: Graph the supply and demand for the good in the market (e.g. aluminum or soybeans) and clearly label both axes and curves, including the equilibrium. Specific numbers are not required but may be labeled, if they appear in the article. This is your first graph.

In a second graph, redraw the market and illustrate the resulting price change or disequilibrium by showing a shift in supply, in demand, or in both (as we did in Chapter 4).  You must have two shifts. (They may come from the same side of the market.) If your article does not address two shifts, you must find two articles with one shift each.

Note: You can construct the graphs any way you wish. You can even make them by hand and save them as a PDF.

Part III: Type and double space three short paragraphs with at least three sentences each.

In the first one, provide the context or background of the article, or a mini summary. Do not duplicate the second and third paragraphs!

In the second paragraph, explain the causes of the first shift and the direction of the shift. Does the price rise or fall? Then state what category of determinants the cause represents (see the list below). 

Note that some cause could fall under two categories. See the next page for a hypothetical example.

In the third paragraph, explain the causes of the second shift and the direction of the shift. Does the price rise or fall? Then state what category of determinants the cause represents (see the list below).

At the end of the third paragraph, explain the combined effect of the two shifts: does the price rise or fall overall?

The determinants are listed in Chapter 4 (Sections 4-2c and 4-3c) as well in my PPT slides. See the list below.

Demand: Income

Prices of related goods (substitutes or complements)

Tastes

Expectations

Number of buyers (population)

Supply: Input prices

Technology

Expectations

Number of suppliers

Extra: Weather or other natural changes

Part IV: Scan the article and upload it with your write up. If you cannot scan it, copy the live link. If you do not provide the link, I cannot grade your assignment.

Part V: List all people (including family members and classmates) who helped you with this assignment. If you worked on it alone, say so.

Hypothetical example for one shift causing higher aluminum prices:

Given the current pandemic, people are afraid that they may not be able to find certain foods in the future, so they cook and bake and freeze their products. To freeze them successfully without causing freezer burn, they use a lot of aluminum foil. Their growing need for aluminum foil indicates that they are willing to purchase more at any reasonable price. Such an increase represents an increase in demand, which is a rightward shift, which causes the price of aluminum foil to rise. The increased preference for foil can be categorized as a change in tastes.

Grading rubric for an article with two shifts:

Part I:

Appropriate article: 45

(Appropriate article with one shift: 35 points)

Part II: Well-labeled graph of supply and demand or the good in the market 5

Two shifts in the right direction 10

Part III:

Paragraph 1: Summary/background 10

Paragraph 2: Analysis of first shift 10

Category of shift is worth 3 points

Paragraph 3: Analysis of second shift 10

Category of shift is worth 3 points

Explanation of the combined effect of the two shifts 5

Part V:

Acknowledgments 5

100