Assignment Detail:- ECON1048 Managerial and Business Economics -
Introduction
In this assignment you will take the role of a professional economist, assessing the likely impacts of the proposal detailed in section 2- You will analyse the proposal using techniques developed throughout this course, and prepare a research report detailing your findings and their implications-
Formatting requirementsYour assignment must be typed using Microsoft Word, or a similar word processor- The document should have a professional appearance, appropriate to a corporate workplace- Format your assignment as follows:• Use A4 sized paper with all margins at least 2-5cm-• Include a title page as the first page of your report-• Body text to be 12pt and black- -There is no minimum line spacing--• Include a word count at the end of every section except the analysis section-• All pages, except the title page, to be numbered-
Scenario
Your client, InsureCorp, is an insurance company considering launching an ‘income insur- ance' product in the island nation ofAutarka- Income insurance is a product thatfully insuresa household against changes in income caused by a major injury or illness-At present, no businesses are selling income insurance products in Autarka- Initial mar- ket research suggests that there are 10,000 households in Autarka interested in purchasing income insurance-
Your client expects that the fixed cost of launching the income insurance product will be $20,000,000 per year, and that each policy issued to a customer will cost the company an additional $1,500 in sales commissions-
Your taskYour client wants you to analyse the potential market for income insurance and report on the following:• What is the maximum price the company can charge a household for an income insurance policy????• What is the expected profit -or loss- for the company if it becomes a monopoly provider of income insurance????• Is there a risk that rival insurance companies will also enter the market, selling identical income insurance products???? If so, what would be the expected profit of your client???? -You should assume that any competitors would face the same costs as your client--
Report
Your report should be prepared with the following structure: 1-Introduction 2-Analysis 3-Discussion 4-Conclusion
IntroductionIn your introduction you should succinctly and accurately summarises the purpose of your report- You should also outline the methodology employed in your analysis, and your key findings- The introduction has a 200 word limit-
AnalysisIn the analysis section you must complete each of the steps detailed below- When com- pleting the steps you must:• Type all equations using the ‘Insert Equation' function -or equivalent--• Show all of your working and include sufficient written description for the reader to follow your process-Note that hand draw figures and equations are not acceptable- There is no word/page limit for the analysis section-Step 1:Derive an expression for the typical household's marginal rate of substitution-Step 2:Find the typical household's optimal consumption basket when its income is $160,000- What is the household's associated level of utility????Step 3:Find the typical household's optimal consumption basket when its income is $6,400- What is the household's associated level of utility???? Step 4:What is the typical household's expected utility if it does not purchase insurance???? Step 5:What is the expected payout to the typical household if it does purchase insurance????Step 6:What is a household's maximum willingness to pay for insurance???? -Hint: Use the utility function U = I/64 for this step only--
DiscussionIn your discussion you should address all the issues raised in the scenario- This includes explaining the significance of the findings of your analysis in the context of the scenario, and providing arguments in support of the conclusions of your report- Be sure to base your discussion on the results in your analysis section and avoid assertions or speculation- Use economic terminology as appropriate- The discussion has a 500 word limit-
ConclusionYour conclusion should succinctly and accurately summarises the findings of your analysis and the implications of these findings for the scenario- The conclusion has a 200 word limit-
Attachment:- Managerial and Business Economics-rar
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