Exam Submission Form

 Please complete and attach this form to your exam. All exam must be submitted on the stipulated submission date.

Program / Intake: FT UCD BBS34

Student Number: 20208469

Module Title: Economics and Market Innovations (EMI)

Module Code: FIN2001S

Word Count: 1201

Question(s) 3
Attempted 4
5
6

DECLARATION: I hereby declare that the attached exam is my own work. I understand that if I am suspected of
plagiarism or another form of cheating, my work will be referred to the Academic Registrar/ or the Board of
Examiners, which may result in me being expelled from the program.

Signed: _suci vilia audestia______________________ Date Submitted: _14 January

2021______________________

3. (i)
 Quantity of Variable Total cost AVC ATC Marginal
meals cost cost
0 $0 $100 - -
10 $200 $300 $20.00 $30.00 $20.00
20 $300 $400 $15.00 $20.00 $10.00
30 $480 $580 $16.00 $19.33 $18.00
40 $700 $800 $17.50 $20.00 $22.00
50 $1000 $1100 $20.00 $22.00 $30.00

(ii)
(b) because they are advertising in consumer awareness campaigns, this boost public and industry
morale. It is a way to create product differentiation and thus to acquire some of market control and charge
a higher price. Example of monopolistic competition are restaurants which they compete on quality of
food as much as price. Also hairdressers is an example of monopolistic competition because it is
competing between a service which will give the company a reputation for the quality of the hair-cutting.
(c) there are two barriers:
- Natural entry barrier = a. Economies of large scale production
b. ownership
c. high set-up cost
d. high R&D cost
- Artificial barrier = a. predatory pricing
b. limit pricing
c. superior knowledge
d. predatory acquisition
e. advertising
f. a strong brand
g. loyalty schemes
h. exclusive contracts, patents and licenses

4. a) When network effects are strong, the provided by a platform continues to rise sharply with the
number of participants. For example, as the number of users on Facebook increases, so does the amount and
variety of interesting and relevant content.

b) In a service-based market, the suppliers (supply) offers a service or goods to the users (demand).
The example of service-based markets are Airbnb which connects people who are looking for a place to stay
with proprietors or landowners renting their properties. Uber also includes in service-based relationships by
connecting riders with drivers offering rides.

In difference, a subsidy-based market happen when one side indirectly pays another side’s costs of
using the platform but also they did not offer any services that exactly attracts users to the platform. For
instance, Facebook and YouTube are included in subsidy-based market. They connects readers or viewers
with advertisers and were given below-cost or free access to the platform.

c) Launching a multi-sided company needs a lot of energy. The platforms also need to reach critical
mass.

d) i. The first tactic is start as a single-sided platforms. For example Instagram, they offered a system
to take photos with our own smartphone and edit it effortlessly to make it look decent before posting it on
social network.
ii. Extend the assets (property, plant, equipment) to others. The example of this tactic is Amazon,
they had their single-sided business model operating when Amazon started using their assets to add a new,
two-sided business to their offering. This marketplace is where consumers can discover services and also
products offered by another businesses or individual. Amazon were able to use their infrastructure and also
expand the ordering systems, billing and so on.
iii. Start in a local market or niche category and expand. Facebook for example, they started from
connecting student who knew each other or wanting to know about each other first, then they continued with
other schools or universities before they grew outside the university world and now Facebook is well known
to the entire world.
iv. Being allied on other existing network. In the first few months, YouTube was not doing really
well. The founders had to upload their own video’s to try to gain some traction. The one that really helped
YouTube is by embed YouTube videos on MySpace which back in the day they were the lagest social media
network. MySpace let YouTube videos to be embedded on blog and for the reason that between mid-2005
and mid-2006, YouTube succeeded critical mass.

5. a). Two-sided market exist when when the buyers and sellers meet to swap a product or service that
created a bids to buy and asks to sell. Also this is when two agents interact through a platform (which can
benefits both parties). A two-sided market has sellers and buyers offered for transaction in asset or services.
Two-sided market regularly described by the relationship the platform has with other external agents on its
platform, the connection is seen in pricing. Example for two-sided market is Google.
In contrast, one-sided market happens when market makers only quote the bid or the asked price.
One-sided markets can also rise in conditions where fear has taken over, example when asset collapses.
Example for one-sided market is when market makers offering shares in IPO (strong investor demand).

b). Price discrimination happens when identical products or services are sold at difference price at the
same providers. Company or firms use this to get the most revenue from the customer.

c). Second degree price discrimination occurs when the price of products or services differs
according the quantity demanded. The bigger or larger quantity demanded, the lower the price. Usually,
customers get lower prices when they buy a products in a bulk quantity. Example for this airline tickets
where sometimes they offer a discount for buying bulk tickets.
Third degree price discrimination is charging diverse prices varying on a market segment, e.g.
age, sex, income group, and locations. For instance, buying a movie tickets, most of movie cinemas are
selling their price on a category, example is age category, the company selling varies of price depending on
customers’ age, they categorized it as infant which usually free , children and adult which all are on
difference prices.

d). Penetration price is a marketing strategy the firms use to attract customers to a new launching
products or services by lowering the price. This strategy can helps the businesses to attract customers away
from the competitors and after the period of growth, the businesses usually raises prices to its normal price to
gain more revenue. Food and beverage companies for example, they usually use the penetration pricing
example to introduce the new products or flavors for customer to try at low prices so people will give it a try.

6. a). indirect network effects means the value service growths for one user group when a new user of a
different user joins the networks. This allowed YouTube to capture the worth being created by its creative
content creators. In a logic, the users actually benefited as well since cash flow let YouTube reinvest in its
own platforms.

b). market power indicates to a company’s qualifies ability to manipulate the price of an item in
marketplace by manipulating the level of supply, demand or sometimes both. Four of the main factors that
influencing market powers are :
i. number of companies this means fewer companies or businesses mean greater market
power is available to each player.
ii. product differentiation, if the company can make a different goods and service that are able
to fulfil a hole in the market, this company will benefit market power.
iii. single-homing and multi-homing.
iv. barriers to entry and expansive.
 c). switching cost can happen between platforms, or between platforms and direct sales dues to
customer habit and convenience.

d). customer data is possible to gather transaction data for market participants.
Econometric techniques is a combination of evidence and stated preference .
Survey evidence provides a guaranteeing source of information on the strength and impact of
feedback loops.