The assignment do not have a specify assignment title but the field of this assignment is economics and it refers to the competition and industry. We are require to answer the two questions referring to the situation provided at the top of each question. We do not have to make it as an essay, we can just answering the questions(i)(ii)(iii)(iv) one by one. Question 1 must illustrate appropriate diagrams and Question 2 with clearly calculations.
A good sources which is our textbook, following the text book is essential to deepen the understanding of the material. (Perloff, JM 2012, Microeconomics: Global Edition, 6th edn., Pearson Education.)
In question 1 part (i) asking “have the exact same impacts on the household in terms of its utility level and consumption…” means under what kind of preference characteristics will the two alternative policies have exactly the same effect on the consumer’s utility and the consumption levels of the two goods. When this were the case, the consumer would indeed be indifferent to which of two policies the government adopted.
Regarding question 2, the first part is about the SHORT RUN and the second part is about the LONG RUN. There is no scope to make anything up for this question – we need to be calculating the right values.
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