As an economist, in addition to being able to analyze a situation, you will need to be able
to communicate your ideas to others. As with your previous writing assignment, in this writing
assignment, you will be acting
...
As an economist, in addition to being able to analyze a situation, you will need to be able
to communicate your ideas to others. As with your previous writing assignment, in this writing
assignment, you will be acting as an economic policy advisor. Your task is to read the scenario
below, and do two things: 1) analyze the policy being considered using the analytical tools we
have been developing in ECO200, and 2) write a brief, professional memo outlining your policy
recommendation.
Scenario:
In the town of Tironto, there is a firm (MegaTire) that produces and sells snow tires.
Because Tironto is pretty isolated, and snow tires are big and expensive to ship, this firm
currently operates as a monopoly. Interestingly enough, MegaTire is currently owned and
operated by the local government, and generates a consistent stream of revenue for Tironto.
However, the city is not especially good at running tire factories – all of the experts consulted
agreed that if this firm were run as a private company, the costs of producing tires would be
lower.
Mayor McNeill is considering privatizing MegaTire; selling it to be run by private
companies rather than operated by the town of Tironto. MegaTire actually has two factories that
make the tires, so if the city decides to sell, it can be sold either as one firm, or divided up and
sold as two firms. Mayor McNeill has contacted you for your advice as to the best course of
action. You know him pretty well at this point, and know that he cares about both the potential
revenue from the sale of the firm, and the well-being (consumer surplus) of the people of
Tironto. He wants to know whether selling MegaTire is a good idea, and if the city does sell,
whether it is better to sell it as one firm or two. Your research so far has indicated that there are
a lot of potential buyers of MegaTire, so regardless of how the firm is divided up, Tironto would
be able to find a buyer that would pay what the firm is worth.
Note: You may, if you wish, assume that there is a constant marginal cost of producing tires.
You may also assume that the discount rate for everyone involved is the same, and that it is
constant over time. Also, other markets for tires seem to compete in quantities rather than in
prices, so it is safe to assume the same would be true in this case. Additionally, tires are subject
to arbitrage, so price discrimination is not practical in this market.Instructions:
Your task contains two parts, an analysis and a cover letter.
Analysis: In this section of your writing assignment, you should analyze the above scenario
using the tools we have discussed in ECO200. You may assume that your audience has also had
ECO200. This means that you should model and describe the situation under consideration
using tools we have discussed, and analyze the predictions of that model as it relates to the policy
objectives. You should be clear about what you are considering when making your policy
recommendations, and how those factors impact your decision. If you make any additional
assumptions (beyond those mentioned above), you should clearly state them and if relevant,
address what would happen if those assumptions do not hold.
Length: Your analysis part of the writing assignment should be approximately 700 words.
Cover Letter: In this section, you are communicating the main results from your analysis to
Mayor McNeill in a clear and concise way. This letter should be professional but not technical
in nature – it should explain the main ideas of your analysis in a way that can be understood by
someone who is not an economist. The purpose of the cover letter is to summarize the
information from your analysis – the things you say in your cover letter should be supported in
your analysis section, and the main results of your analysis should be included in the cover letter.
The cover letter should make a recommendation – this could be to sell MegaTire as a single firm,
as two separate firms, or to not sell at all. Or, if you cannot make a clear recommendation
without more information, describe what more you need to know, and how it would help you to
make this decision.
Length: Your cover letter should be no more than one page (about 250 words), including the
formatting. You should include your name and student number in the upper left-hand corner, but
format the rest of this part of the assignment as a letter or a memo. We will not require a specific
style for the letter, but it should include an appropriate salutation and closing, and be written in a
professional tone.
Logistics:
Submit your assignment online to Quercus.
To submit your assignment, follow these instructions
o In “Assignments” click the item titled “Writing Assignment 2”.
o Follow the file naming guidelines below.
o Uploaded files should not include special characters in the file name for example,
# ! % ?. Do not attach multiple files with the same name.
Your assignment will be graded according to a rubric. The rubric is posted in the Writing
Assignments folder in the “Files” section of the Quercus webpage.Formatting:
To earn full marks, you must do the following:
Your assignment must be typed, double-spaced and have a font size of at least 12 points
in Times New Roman.
Put the word count of your assignment in parentheses at the end. For example, “(X
words)”
The file you submit must be a PDF document.
Files must be named FamilyName_GivenName_ECO200_2 for the first assignment and
FamilyName _ GivenName _ECO200_2 for the second assignment, where FamilyName
is your family name and GivenName is your given name.
Penalties
You will receive a 10 percentage point penalty (5 marks)1 for submitting an assignment
after the deadline, and an additional 10 percentage point penalty assessed every 24 hours.
For example:
o An assignment submitted at 5:00:13 PM (thirteen seconds after 5:00 PM) on the
due date will receive a 10 percentage point penalty.
o An assignment submitted 25 hours late will receive a 20 percentage point penalty.
No extensions will be granted under any circumstance (e.g., illness, computer problems,
etc.).
We will deduct 1 mark (2%) if you fail to show the word count, exceed the word count,
submit an unacceptable file format (other than PDF), use an improper file name, use an
improper font, etc. Multiple problems will result in multiple deductions. Be aware, there
is no cap on the total penalty.
Assistance:
The disruption of the University due to concerns about the coronavirus means that we will have
to adjust the way in which we conduct writing office hours. We are currently still testing out the
best way to provide feedback on drafts – once we have finalized that decision, we will let you
know and update this document.
1 Your WA will be graded out of 50 marks, according to a Grading Rubric. The rubric will be posted in a separate
document.Writing Tips2:
Use simple, clear language. Avoid metaphors, flowery speech3 or jargon.
Do not use the passive voice (The box was held by John) when the active voice is an
option (John held the box).
Keep your sentences short.
Make sure your paragraphs are self-contained and coherent: put only one main idea in
each paragraph. Avoid too long (more than 1/3 of a page) or too short (one or two
sentences only) paragraphs.
Make your main point early on, and make sure that everything you write serves to
support your main point (even your counter-arguments serve to support your main point).
Support each argument with evidence, such as a statistic, example or economic
reasoning.
Make clear the economic concepts and reasoning on which your argument is based.
2 From Jessie Lamontagne and Andrea Williams.
3 For example: “Since the dawn of time, economists have contemplated . . .”
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