Question 4:

a) Example and Shock: Choose a topical and relevant example of a firm dealing with a change that could be appropriately analysed with the model of Monopolistic Competition. Your case study may relate to the current COVID-19 situation as it applies to an industry, but other case studies are also very acceptable.

i) Give an example of a firm and industry that could be analysed using the model of Monopolistic Competition. Justify why it would be appropriate to use the model.

ii) Give an example of a major change that has affected the firm (i.e. a shock).

b) Analysis: Use the appropriate model to analyse the effects of the shock you have identified. Present clear, appropriately labelled diagrams. Explain:

i) The shifts in curves.

ii) The output and pricing decisions of the firms.

iii) Effects on the firms and the industry.

c) Empirical Evidence: Present some quantitative data that gives further context to your analysis. Given the time constraints, it is not necessary to create charts etc, but you can use your data to quantify some of the variables from your Analysis in part b) above.