The Economics Principles Task (EPT) Assessment Help

Part 1 – 20 Marks

Case Study on Amazon in the US

Under capitalism, firms are always looking for economic rents made by degrees of monopoly power, through institutionalising innovation. Consider Amazon, which started out in the mid-1990s as a humble online book retailer and is now the largest retail seller outside of China. Known as the ‘Everything Store’, Amazon has seen record profitability of late in its core offerings of online shopping with home delivery, media streaming and cloud web-services.

Your tasks for Part 1 are as follows:

To give you some relevant background knowledge on Amazon, read the following news articles:

1. Grimmer, Louise, Gary Mortimer and Martin Grimmer (2021) “What’s next for Amazon after Jeff Bezos? No dramatic changes, just more growth and optimisation”, The Conversation, February 4th, available: https://theconversation.com/whats-next-for-amazon-after-jeff-bezos-no-dramatic-changes-just-more-growth-and-optimisation-154553
2. Banker, Steve (2021) “Amazon Supply Chain Innovation Continues” Forbes, April 1st, available: https://www.forbes.com/sites/stevebanker/2021/04/01/amazon-supply-chain-innovation-continues/
3. Chant, Tim De (2021) “After helping decimate department stores, Amazon plans to open its own”, ArsTechnica, August 20th, available: https://arstechnica.com/tech-policy/2021/08/after-helping-decimate-department-stores-amazon-plans-to-open-its-own/
4. Stoller, Matt (2021) “At last, the regime that enabled Amazon's monopoly power is crumbling”, The Guardian, February 4th, available: https://www.theguardian.com/commentisfree/2021/feb/04/amazon-jeff-bezos-monopoly-power-antitrust
5. Feiner, Lauren and Annie Palmer (2021) “DC attorney general sues Amazon on antitrust grounds, alleges it illegally raises prices”, CNBC, May 25th, available: https://www.cnbc.com/2021/05/25/dc-attorney-general-sues-amazon-on-antitrust-grounds-alleges-it-illegally-raises-prices.html
6. Do some additional research and elaborate on the following vis-à-vis innovational processes:

• Three investment strategies of Amazon done in the recent past (2017 to 2021) to ensure cost efficiency within the supply chain, the picking, packing, and shipping of orders.
• Two concrete examples from recent years of the dominant forces of creative destruction as Amazon pursues new customers and goes beyond its online-only presence.

[700 to 800 or so words is the suggested amount for Part 1a] 

[8 marks for quality of explanation]

1. Illustrate using an appropriate diagram where amazon.com sets price to maximise profit (adapting Figure 7.9d from CORE ESPP) to explain in some detail how the outcomes to customers compare to a more competitive, price-taking firm.

• In your diagram, assume at the profit-maximising point in Q2 of 2021 the average price of items is $27*, and also that Amazon’s online shopping customers are very price-conscious. Use hypothetical values (rough guesses) relying on intuition for quantities and cost.
• In your answer, do a little more additional research and elaborate on alleged ways the monopolist sustains its profitability in light of the accusations of the attorney general for the District of Columbia.

       [500 to 600 or so words is the suggested amount for Part 1b] 

       [4 marks for diagram + 8 marks for quality of explanation = 12 marks]