Theories of microeconomics and their applications

The top four beer firms- Anheuser- Busch, Miller, Coors, and Stroh’saccounted
for over three-quarters of all beer produced in the United States in
1992. Anheuser- Busch alone had 42 percent of the market.

1- Do you think that the market for beer in 1992 was is a contestable
market? Why? [25 Marks]

2- In the 1960s, the long-run average cost of producing beer was at a
minimum when a firm produced about 2 million barrels per year. In
the late 1970s, it was at a minimum when a firm’s output was about
18 million barrels per year. How would microeconomics explain this
increase in the cost minimising output? [25 Marks]

3-How would this change in the long-run average cost curve have
contributed to the decrease shown below in the number of firms in
the brewing industry? [25 Marks]
Year Number of firms Year Number of firms
1963 171 1972 108
1967 125 1976 49

4- Which changes in the market have led to the recent growth in
microbreweries in the United States? Would this change in structure
alter your assessment of the applicability of the contestable market
model? [25 Marks]

Please read all questions and information provided carefully. Answer should
be made in appropriate length keeping in view the requirement of each
question and total word counts allowed.
In addition, your assignment should demonstrate the following qualities:
A critical appreciation of relevant literature and its use to support
argument, substantiate calculations and other aspects of the assignment.
Evidence of additional personal research, and the ability to analyse material
from a variety of appropriate relevant perspectives.
Presentation, structure, appropriateness of methodology, breaking into
section headings/subheadings, tidiness.
Marks will be awarded for proper referencing and originality of work. Also
note that plagiarism is a serious offence and your submission will be
electronically checked.
Your work must be handed in electronically no later than given date of

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