ECON1001 Principles of Economics Assessment 2 Research Essay Semester

ECON1001

Principles of Economics

Semester 1, 2026

Assessment 2: Research Essay

Weighting: 30% of final grade
Length: 3,000 words (±10%, excluding references and appendices)
Due Date: Week 10, Friday 8 May 2026, 11:59 PM
Submission: Electronic submission via Turnitin on Moodle

Task Description

This research essay requires substantial independent research beyond the prescribed textbook. You must define concepts accurately, state assumptions clearly, and support arguments with appropriately labelled, original diagrams (hand-drawn and scanned or created in software; no photocopied graphs permitted).

Questions

1. Identify and explain the key characteristics of the four main market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Provide one real-world case study example for each structure, justifying why it fits the characteristics described. (8 marks)
2. Explain the concept of negative externalities and why they provide a justification for government intervention in markets. Discuss two policy instruments commonly used to address negative externalities, evaluating the advantages and disadvantages of each. Support your analysis with real-world examples. (8 marks)
3. Select a current market in your home country where negative externalities are present. Using a diagram, illustrate the externality, the resulting market failure, and the deadweight loss. Critically evaluate how your government has addressed (or failed to address) this externality through policy measures. (10 marks)

Presentation and referencing (4 marks)
Clear written expression, logical structure, and professional presentation including accurate original diagrams (2 marks).
Appropriate use of academic sources and correct APA 7th edition referencing (2 marks).

Assessment Criteria

• Accurate and complete definition of economic concepts
• Clear statement of assumptions
• Effective use and explanation of original, correctly labelled diagrams
• Depth of research using academic books, peer-reviewed journals, and reputable reports beyond the textbook
• Critical analysis and application to real-world examples
• Coherent structure, clear expression, and adherence to APA referencing

Sample Response Guide (Part b)

Negative externalities occur when production or consumption imposes uncompensated costs on third parties, leading to over-production or over-consumption relative to the social optimum. Pollution from manufacturing exemplifies this market failure, as firms do not bear the full social cost of emissions. Government intervention is justified to internalise these costs and restore allocative efficiency. A Pigouvian tax equal to the marginal external cost shifts the private supply curve leftward, reducing output to the socially optimal level. Advantages include revenue generation for government and incentives for innovation in cleaner technology, though challenges involve accurately measuring external costs and potential regressive impacts on low-income households. Tradable permit systems establish a cap on emissions and allow market trading of allowances. Benefits include cost-effectiveness, as firms with lower abatement costs reduce emissions more, yet initial allocation disputes and monitoring costs can limit effectiveness. Australia’s former carbon pricing mechanism (2012–2014) demonstrated revenue recycling possibilities while highlighting political resistance to pricing mechanisms (Parry et al., 2021).

References

• Mankiw, N.G. (2023) Principles of Economics. 10th edn. Cengage Learning.
• Parry, I., Pittel, K. and Vollebergh, H. (2021) ‘Energy tax reform for climate change mitigation and universal health coverage’, Nature Sustainability, 4(10), pp. 832–839. https://doi.org/10.1038/s41893-021-00762-0
• Frank, R.H., Bernanke, B.S., Antonovics, K. and Heffetz, O. (2022) Principles of Microeconomics. 8th edn. McGraw-Hill Education.
• Goulder, L.H. and Parry, I.W.H. (2020) ‘Instrument choice in environmental policy’, Review of Environmental Economics and Policy, 14(2), pp. 205–225. https://doi.org/10.1093/reep/reaa011
• Kolstad, C.D. (2019) Environmental Economics. 3rd edn. Oxford University Press.