Coles and Woolworths - Oligopoly Market Structure - Economics Assignment Help

Assignment Task:

PART-A 
MICROECONOMICS
Coles and Woolworths operates in the oligopoly market structure. Oligopoly market structure is in which the market share is occupied by a few number of firms and it is highly concentrated. Although few firms dominate the market, small firms also operate. Under oligopoly firms are interdependent with each other. 
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Since, Coles and Woolworths operates in oligopoly market they are interdependent with each other meaning if one of the firm decrease the price another one will also decrease the price so that they won’t lose the market share but doing so the revenue of the both firms decreases. No, it’s not in the interest of Coles and Woolworths to have a price discount war because a fall in prices may have strategic advantages like market share gains or decreased entry, but the risk is that rivals will simply decrease prices to stay in the market.
As per the source 2 and 3 the market for vegetable provided by farmers operates in perfect competition market structure. In perfect market competition there is no barriers to entry and the products produced are homogeneous product and no single producer can influence the market price or market conditions.
The impact on the individual vegetable producer because of price war is the average total cost of individual producer will be more than the marginal revenue of the individual producer. Since the market price of the product will be low due to price war only certain individual producers can supply the product at low price and many of the individual producers have to supply the product below Marginal revenue which will incur economic loss producer. 
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In the long run the small producers will be forced out of the market because they won’t be able to operate in the market when the average total cost will be more than the marginal revenue which will result in economic loss and they won’t be able to sustain in the market.

PART- B 
MACROECONOMICS
ARTICLE-1
Based on the article and graphs the phase of the business cycle of Spain during 2013 was at Trough. In the Trough stage of the business cycle, the economy is gradually decreasing and it reaches a certain negative point where the negative turns into positive and the economy gradually starts improving. The point where the economy changes is known as turning point of the economy. Spain’s GDP for the 1st quarter is -0.4%, 2nd quarter is -0.8% (Turning Point) and the 3rd quarter is -0.3% and for the 4th quarter is -0.1%. GDP is impacted by Consumer Spending, Business Investment, Government Spending and Net Export. The unemployment rate is high in 2013 and the unemployment rate for Spain in the 1st quarter of 2013 is 26.94%, 2nd quarter is 26.06%, 3rd quarter is 25.65% and for the 4th quarter is 25.73% which is very high. Employment rate is highly impacted by Business Investment and Government Spending. If the government spends in developing infrastructure and private firms also invests the employment rate increases and vice-versa. Consumer spending is related with employment. If there is high or full employment the spending of a consumer will be high and GDP will increase and similarly if the unemployment rate is high the spending of a consumer will be low and GDP will decrease. As per the source and graphs the unemployment rate is high due to which the consumer spending is low because the income of a consumers is overall low due to which GDP is negative.
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Based on the article and graphs the phase of business cycle of that Spain has entered in 2014 is the recovery stage. The GDP of Spain has consecutively increased for more than two quarters in 2014. Spain’s GDP growth rate for 1st quarter is 0.1%, 2nd quarter is 0.2%, 3rd quarter is 0.4% and for the 4th quarter is 0.6%. During this period unemployment rate has been gradually decreasing resulting people getting employment. If people get employment that means they are generating revenues which also results in increasing consumption. In 2014, the consumer spending is also gradually increasing. Consumer spending has increased form 90.67 in last quarter of 2013 to 91.55 of 2nd quarter of 2014. If the unemployment rate is decreasing and consumer spending is increasing it results in increasing GDP.
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Given
Employed People = 17,353,000
Unemployment rate = 24.47%
Employment rate = 100 – 24.47 = 75.53%
Total Population = 17,353,000 / 73.53% = 22,974,977 (after round up)
Unemployed People = Total Population – Employed people
    = 22,974,977 – 17,353,000
    = 5,621,977
ARTICLE-2
As per the article, the business cycle Indian economy is experiencing in 2016 is the Peak Stage. Peak stage of business cycle is where GDP is highest, the economy is operating in full employment or maybe above the full employment, consumer spending is high. Indian economy is growing rapidly more than anticipated world target. While the overall economy growth of the world is expected to be 3.2%which is also down 0.2%forecasted in January of 2016 but growth of Indian economy is 7.3% as per in Source 2 of the article. Similarly, the expected growth for the fiscal Year 2017 and 2018 is 7.5% which means the economy is expected to be operating at the maximum possible production. When the economy is expected or is operating at maximum possible production that means the economy is operating at full employment and when there is full employment the consumer will be earning will also be high which results in high consumer spending. The consumer inflation is 4.9% and as per the IMF the target consumer inflation for the economy of Indian in fiscal year 2017 which is 5% is expected to be met at the first half year of the Fiscal year 2017and the expected inflation for 2017 is 5.3%. When the economy reaches the peak point then the growth becomes and slow and after a while it results in negative yields of return if it’s not managed properly. In peak the demand keeps on increasing and at a certain point the economy won’t be able to supply the required demand.
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Going as per the graph of first question the economic cycle of India was in recession phase.
 

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