Contents

1 Overview 2
2 Scenario 3
2.1 Your task 4
2.2 Industry structure 4
3 How to write the industry analysis 6
3.1 Formatting requirements 6
3.2 Template 7
4 How to write the brief 8
4.1 Formatting requirements 8
4.2 Template 9
5 Rubric 10
Chapter 1
Overview

In this assessment task you will take the role of an expert economist, employed by a government department or regulatory authority. Decision-makers in government rely on the advice of experts, like you, when formulating policy or discharging their statutory responsibilities. An expert economist’s role in the government decision-making process is two-fold:
• Analysis: Experts are responsible for analysing alternatives, using the specialised knowledge and skills of their discipline. In this analysis, experts evaluate the alternatives against the government’s objectives and statutory obligations.
• Communication: Experts must communicate their findings to the decision-makers in government — ministers and senior public servants — who, in many instances, do not share the experts’ specialised knowledge.
This task will assess your aptitudes in both of these domains. You are to conduct an industry analysis based on the scenario detailed in Chapter 2. This analysis should be completed and presented following the instructions in Chapter 3. Your industry analysis will form the basis for a brief — a short report to the ultimate decision-maker in the scenario — summarising your recommendations and the associated rationale. The instructions for preparing a brief are detailed in Chapter 4.
Note: While issues raised in the scenario have real-world relevance, the scenario itself is hypothetical. Importantly, characteristics of markets and competition described in the scenario may differ from the real world. Where such discrepancies occur, you should proceed under the assumption that the market characteristics described in the scenario are correct, and conduct your analysis accordingly.
Chapter 2
Scenario

The government is about to undertake a large program of public works, repairing and upgrading bridges around the city. The Department of Economic Development, Jobs, Transport and Resources has decided that the public works will be funded, in part, by a new tax on taxi companies. The government’s rationale for the new tax is that taxi operators benefit from well maintained roads and bridges, and therefore should contribute to their upkeep.
The Department of Economic Development, Jobs, Transport and Resources has developed two competing proposals for the new taxi industry tax:
1. The first proposal is to levy a tax of $2.40 per taxi trip. The tax would be levied on the taxi companies, effectively increasing the cost of each trip to the taxi company by $2.40.
2. The second proposal is to levy a lump-sum tax of $50,000 per day, on each taxi company. The tax would be payable by each taxi company operating in the market, regardless of the number of taxi trips it provides to consumers.
Taxi companies oppose both proposals. In a submission to the Department of Economic Development, Jobs, Transport and Resources, the companies claim that a new tax will not have the intended effect. The companies state that they will have no choice but to pass the cost of a new tax on to consumers, in the form of higher prices, and that consequently the burden of the tax will fall on their customers, not the companies themselves.
Note: In this scenario the department does not have the authority to impose price controls on the taxi industry.
2.1 Your task
The Minister for Public Transport has instructed you to evaluate the two proposals and recommend which of the two proposals the department should pursue. In your recommendation you should consider the revenue raised by each proposal, as well as the impact that each proposal will have on both consumers and the taxi industry. In particular, you are to assess the taxi companies’ claim that it is consumers who will ultimately bear the cost of any new tax. (The minister is concerned that the public will not support the new taxes if they result in significant price rises.)
2.2 Industry structure
In order to facilitate your analysis, the department has collected the following information about the market for taxi trips:
Two taxi companies compete in the taxi industry: Gold Top Taxis and Dark Grey Cabs. Every morning the two taxi companies each decide how many taxis to put on the road. These decisions effectively determine the total number of taxi trips that are supplied into the market on that day. Consumers have no apparent preference over taxi companies.
The price of each taxi trip is determined the willingness-to-pay of consumers for the total number of taxi trips supplied. Inverse demand in the market has been estimated to be,
Q
P = 50 - ,
1400
where P represents the price of a taxi trip in dollars, and Q is the total number of taxi trips supplied into the market on a given day.
The cost characteristics of the two taxi companies have been estimated using corporate accounts submitted to the Ministry of Transport. Gold Top Taxis operating costs are:
• Driver wages and benefits: $8 per trip.
• Fuel: $1.50 per trip.
• Vehicle wear-and-tear: $3 per trip.
• Corporate overheads: $140,000 per day (regardless of the number of trips supplied).
Dark Grey Cabs operating costs are:
• Driver wages and benefits: $8 per trip.
• Fuel: $1.50 per trip.
• Vehicle wear-and-tear: $4.50 per trip.
• Corporate overheads: $140,000 per day (regardless of the number of trips supplied).
The difference between the wear-and-tear costs of the two firms appears to result from more efficient management practices in Gold Top Taxis’ maintenance facilities.
Chapter 3
How to write the industry analysis

The purpose of your industry analysis is to determine how the market will behave in each of the alternatives under consideration (see the scenario in Chapter 2 for more details). The industry analysis will form the basis for the recommendations you will make in the brief. You must ensure that your analysis is sufficient to support your recommendations. Use the notes from lectures 7–10 as a guide for the types of information that you need to derive. The maximum length for your industry analysis is 3 pages, inclusive of diagrams. Any content in excess of 3 pages will not be read or graded.
As you write the industry analysis, keep in mind that the audience is other expert economists. You should employ the correct economic terminology and assume that the reader has an understanding of the underlying economic theory.
3.1 Formatting requirements
The analysis section of this task must be typed using Microsoft Word, or a similar word processor. The analysis should have a professional appearance, appropriate to a government workplace. Format the analysis as follows:
• Use A4 sized paper. (You can find this setting under ‘Page Setup’ in Microsoft Word.)
• All margins to be at least 2.5cm.
• Use a san-serif font such as Arial, Calibri or Helvetica. The same font is to be used throughout the document, for both body text and headings.
• Body text to be 12pt and black.
• Section headings to be 14pt, bold, dark blue and left justified.
• Subsection headings to be 12pt, bold, dark blue and left justified.
• Equations to be typed using the ‘Insert Equation’ function in Microsoft Word (or equivalent).
• Variables in equations to be in italics, with subscripts and superscripts as appropriate.
• Diagrams to be computer generated, and fully labelled.
• All pages to be numbered.
3.2 Template
The industry analysis will be attached at the back of the brief. The analysis should start on a new new page and be structured using the following headings:
Attachment: Industry Analysis
After the heading write 1 to 3 sentences, but no more than 5 lines of text, briefly outlining the method you employ in your analysis. Be sure to state which theoretical model of competition you are using to analyse the market, and why that model is appropriate.
Notation
Here you should list all the variables that you use in your analysis, along with a brief description of each. For example:
• PA – The price of Alpha Industries’ product.
Analysis
In this section you will carry out all of the calculations required to evaluate the alternatives outlined in the scenario. You must show all your working and include sufficient written description for the reader to follow your process. Use the lecture notes and worked solutions in the study guide as an indication of the required level of detail.
Use subsection headings as appropriate to structure your analysis (you should think of the subheadings as ‘signposts’ that help the reader to identify where they are within the analytical process, and the path ahead). Use diagrams where they add value by assisting the reader to visualise key elements of your analysis. You should include at least one diagram.
Note: Remember that the reader’s time is precious. More is not always better. Be concise in your writing and avoid superfluous calculations, diagrams and exposition.
Chapter 4
How to write the brief

The purpose of the brief is to communicate your recommendations to the decision-maker who commissioned your analysis. You need to provide enough information for the decisionmaker to understand your recommendations, and to reach a decision on the matter at hand. However, senior government officials are extremely busy, so you must be brief. The maximum length for your brief is 2 pages. Any content in excess of 2 pages will not be read or graded.
When writing the brief remember that it is for a non-expert audience. Avoid using specialised economic terminology and state everything in ‘plain English’. Moreover, keep in mind that you are not the ultimate decision-maker in this scenario. Rather, you are making recommendations based on your expert analysis. Avoid statements that imply you are giving a direction to the decision-maker such as “The Minister should . . . ” or “The Minister must . . . ”. Instead, use statements such as “I recommend that the Minister . . . ”. At all times be respectful as you are writing the brief for a more senior government official.
Note: The brief should not include any equations or diagrams. The place for equations and diagrams is the industry analysis attachment. Dollar amounts should be included as appropriate.
4.1 Formatting requirements
Format the brief using the paper size, margins and fonts that you used in the industry analysis.
4.2 Template
Many government departments have their own templates for the writing of briefs. The use of a template ensures that senior government officials can easily locate the information they require. The following template is typical of the templates used across government:
Briefing for the (decision-maker’s title here)
Subject: Include a brief but descriptive subject line.
Prepared by: Your name here.
Core Message
Summarise the brief in no more than three sentences and five lines. Use one sentence for the topic, another for the analysis, and the last for the recommendations. Be sure to capture why readers should support the recommendations.
Recommendations
a) Concisely state the principal recommendation that arises from your analysis.
b) State any additional recommendations on subsequent lines.
Note: Do not seek to explain your recommendations here. You will do this in the next section.
Key Information
This section should provide context for, and a summary of the analysis in support of, the recommendations outlined above. Start with a short (1–2 paragraph) outline of the scenario and the issues raised. Next, clearly explain the rationale behind your recommendations, and any trade-offs that are involved. Finally, be sure to address any questions raised in the scenario that are not directly related to your recommendations.
Use subheadings to structure the key information section. Each subheading should concisely summarise a finding of your analysis. The text under each heading should briefly explain the finding. Taken together, the findings in the headings should justify your recommendations.
Financial Implications
Briefly summarise the financial implications of your recommendation for the Government (if any). Include the precise dollar amounts that come out of your analysis.
Chapter 5
Rubric

The rubric detailed below provides an indication of the performance standard expected for each given rating (corresponding to a mark or range of marks). In the event that your submission does not neatly fit one of the ratings for a given criterion, the grader will provide you with individual feedback explaining the marks awarded.
Criteria Ratings
Structure & formatting Excellent (8–10 Pts) Satisfactory (5–7 Pts) Unsatisfactory (0–4 Pts)
Note: Deviating from the formatting guidelines in order to avoid exceeding the page limits (eg. by using smaller fonts or margins), will result in an automatic grade of zero for this criterion. The brief and industry analysis are structured in accordance with their respective templates. The document is formatted in accordance with the instructions, and has a consistent and professional appearance. The brief and industry analysis are mostly aligned with their respective templates. The document may have minor deviations from the formatting guidelines, and/or inconsistent formatting. The brief and/or industry analysis deviate considerably from their respective templates/formatting guidelines.
Subject line Excellent (3 Pts) Satisfactory (2 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
The subject is
and appropriately scriptive. brief de- The subject is overlong and/or insufficiently descriptive. The subject is inappropriate for the scenario addressed in the brief. The subject line is absent.
Core message Excellent (7 Pts) Satisfactory (5
Pts) Marginal (3 Pts) Unsatisfactory (1
Pts) Not present (0
Pts)
The core message succinctly and accurately summarises the topic, analysis and recommendation(s). The language used is appropriate to a brief. The core message summarises the topic, analysis and recommendation(s). The core message may lack clarity, contain inaccuracies, or use language inappropriate for a brief. The core message partially summarises the topic, analysis and recommendation(s). There may be significant omissions and/or inaccuracies. The core message does not effectively summarise the topic, analysis and recommendation(s), and/or the core message exceeds 5 lines in length. The core message and/or core message section are absent, and/or are inconsistent with the requirements of the template.
Criteria Ratings
Recommendations Excellent (5 Pts) Satisfactory (3 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
The recommendation(s) address the requirements of the scenario. Each recommendation is clearly and concisely stated, and contains no extraneous information. The recommendation(s) substantially address the requirements of the scenario.
The recommendation(s) may be lacking in clarity, or contain some extraneous information. The recommendation(s) are insufficient to address the requirements of the scenario, and/or are stated in a manner inappropriate for a brief. The recommendation(s) and/or recommendation section are absent, and/or are inconsistent with the requirements of the template.
Key information Excellent (16–20 Pts) Satisfactory (10–15 Pts) Unsatisfactory (0–9 Pts)
The key information provides the context for the recommendation(s). Subheadings accurately summarise the findings of the industry analysis, with each finding explained. The findings are logically ordered and, taken together, justify the recommendation(s). Any additional issues raised in the scenario are addressed. The key information is presented clearly and concisely, in non-technical language. The key information provides the context for the recommendation, summarises the findings of the industry analysis, and addressed any additional issues raised in the scenario. There may be some omissions or inaccuracies. The logic of the argument justifying the recommendation(s) may lack an appropriate structure and/or omit a necessary step. The key information may lack clarity, include extraneous elements, or use language inappropriate for a brief. The key information fails to justify the recommendation(s), and/or the key information has been prepared in a manner that deviates substantially from the requirements of the template.
Financial implications Excellent (5 Pts) Satisfactory (3 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
The financial implications of the recommendation(s) have been correctly detailed, and are supported by the analysis. The accompanying explanation is brief, informative, and uses appropriate language. The financial implications of the recommendation(s) are present with few (if any) inaccuracies. The accompanying explanation may be overlong, lack clarity, contain inaccuracies, or utilise language inappropriate for a brief. The financial implications of the recommendation(s) have been incorrectly stated, and/or the accompanying explanation is inadequate in the context of a brief. The financial implications and/or financial implications section are absent, and/or are inconsistent with the requirements of the template.
Industry analysis: Excellent (5 Pts) Satisfactory (3 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
Introduction

Industry analysis:
Notation Excellent (5 Pts) Satisfactory (3 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
All notation used in the analysis section is listed in the notation section with brief but informative descriptions. The notation section contains some omissions and/or inaccuracies. The notation section contains several omissions and/or inaccuracies. The notation section is absent, and/or the section is inconsistent with the requirements of the template.
The introduction concisely and accurately outlines the methodology used in your analysis. The theoretical model of competition selected is appropriate to the scenario, and the justification for its use well argued.
The theoretical model of competition selected is appropriate to the scenario. The introduction may be overlong, lack clarity, or contain inaccuracies.
The model of competition selected is inconsistent with the scenario, and/or the introduction is inadequate or contains substantial errors.
The introduction is absent, and/or the inconsistent with the requirements of the template.
Criteria Ratings
Industry analysis: Exposition & extent Excellent (8–10 Pts) Satisfactory (5–7 Pts) Unsatisfactory (0–4 Pts)
The analysis is well structured, with the steps taken clearly and succinctly explained. Economic terminology is employed correctly throughout. The analysis does not contain significant extraneous elements (calculations, diagrams or exposition). The explanation of the analysis is generally sufficient to allow the reader to follow the process. Some errors in grammar and terminology may be present. The exposition and analysis may contain significant extraneous elements. The exposition is insufficient for the reader to follow the process. There may be issues with lack of detail, lack of clarity, or significant inaccuracies.
Industry analysis:
Execution Excellent (20–25 Pts) Satisfactory (13–19 Pts) Unsatisfactory (0–12 Pts)
Note: Marks for this criterion will be awarded consistent with the model solutions. The analysis follows the correct methodology with few (if any) errors. All (or almost all) required working is present. Diagrams are completely labelled and correctly illustrate a significant element of the analysis. The analysis is generally consistent with the correct methodology. The working may contain several errors or omissions. Diagrams may be absent, inaccurate or incomplete. The analysis deviates substantially from the requirements of the scenario. See the grader’s comments for more details.
Industry analysis: Excellent (5 Pts) Satisfactory (3 Pts) Unsatisfactory (1 Pt) Not present (0 Pts)
Diagrams
The analysis section contains one or more diagrams that effectively and correctly illustrate key elements of the analysis. The diagrams are completely labelled and professional in appearance.
The analysis section contains one or more diagrams that illustrate some key elements of the analysis. The diagrams, and labelling, contains few (if any) omissions or errors. One or more of the diagrams may be superfluous to the requirements of the analysis.
The analysis section contains one or more diagrams. The diagrams may be incomplete, contain significant errors, and/or fail to illustrate key elements of the analysis.
No diagrams are present in the analysis section.