ECON545 Paper Project 1 – Demand Determinants

ECON545 Paper Project 1 The Microeconomic Paper tests your ability to apply economic principles to a business decision. Selectone situation from the items outlined below: A to D. Complete the paper on the selected situation asspecified below. The completed paper is a professional report and is due in Week 3 (130 points). See thegrading rubric at the end of this document. For sources of data, you can choose from the list presentedat the end of this document.The following is a list of the specific required information, research, graphs, and math to be included ineach answer regardless of the scenario chosen.1. Demand Determinants:a. Each individual determinant analyzed for your situation, with examples applicable toyour situation (3 points each) and research (2 points each) showing current demanddata or most recent past data, except for the expectations determinant in which youneed to use data estimating future market conditions.b. (10 points) Price Elasticity of Demand facing you in your scenario, including actualcalculation of it using the midpoint formula. If you can’t find data, then determine theprice elasticity from the characteristics and make up numbers to use. Be sure toidentify this if you use this approach. This will help you in deciding the slope of yourdemand curve below.c. (5 points) Graph the demand facing your situation. Note that this requires informationfrom the supply determinant analysis before deciding how to draw the curve(s), asyou may need a separate MR curve.2. Supply Determinants:a. Each individual determinant analyzed for your situation, with examples applicable toyour situation (3 points each) and research (2 points each) showing current supplydata or most recent past data, except for the expectations determinant in which youneed to use data estimating future market conditions.i. (20 points) You need to be very specific in the cost of production determinantto identify fixed, variable, and marginal cost in order to derive your supplycurve for the graphing component. You will need to explain and show howprofit maximization or loss minimization output and price are determined. Youwill need to do the math using actual figures [cited] or your own estimatedECON545 Paper Project 1 Page 1 of 6 figures [identified as such] and explain why you expect short run economic ornormal profits, acceptable loss or temporary shutdown, and how you willknow which it is.ii. The number of sellers determinant must contain your analysis of the kind ofmarket structure in which your firm or labor service will be sold.b. (10 points) Price Elasticity of Supply you have based on the cost of production changesas output changes, including actual calculation of it using the midpoint formula. If youcan’t find data, then determine the price elasticity from the characteristics and makeup numbers to use. Be sure to identify this if you use this approach. This will help youin deciding the slope of your supply curve.c. (5 points) Graph your supply situation using the numbers from your earlier cost ofproduction analysis.3. Recommendations—(40 points) what are your recommendations explained by your analysis?4. Paper presentation—(10 points) good format, citations, lack of spelling errors, etc. Situation AJenny, your niece, is a smart high-school student who wants to make smart choices for her future.Hearing of your course in Business Economics, she has emailed you asking for advice on whether tobecome a medical doctor and on the best location to practice it. She recognizes the high costs of tuitionand the years of study involved in becoming a doctor. She wants to evaluate if that career choice is anoptimum decision for her. So she has asked you for advice.Having read the introduction to Chapter 1 on page 3 of the textbook, you recognize the significance ofsuch a career decision for Jenny. You decide to examine the career choice in terms of the utility itprovides to Jenny: return on investment as well as personal satisfaction of contributing to the well-beingof others. But to evaluate the utility, you also need to identify and quantify the total opportunity costs ofthe decision. You decide to educate yourself about the market for physicians in terms of supply anddemand, elasticity, costs of production, pricing, and normal profit. You want to provide Jenny with themost informed advice possible. Situation BYour neighbor Cindy wants to start a contracting business for installing solar panels. She has heard of thecost savings that households and businesses can make each year from installing solar panels on theroofs. Cindy has also heard of government incentives for installing solar panels. Being concerned aboutthe environment and wishing to reduce pollution, Cindy thinks installing solar panels also serves a socialECON545 Paper Project 1 Page 2 of 6 purpose. But she does not want to risk her life’s savings on a venture that might not succeed or becomeprofitable enough. After hearing from you about taking this course in Business Economics, she decides toask you for advice.At first you were hesitant to give investment advice. Then you read the section “Losing Money in theSolar Panel Industry” on pages 402-403 of the textbook, and the need for differentiation in Chapter 13.You realize there are more pieces to the decision than Cindy is considering. You decide to research themarket in terms of supply and demand, elasticity, costs of production, pricing, normal profit, and savingsfor consumers. You want to provide Cindy with the most informed advice possible Situation CCousin Edgar is always thinking of the next business idea. This time, he plans to invest in buying two gasstations. He reckons American consumers have come to accept the high gasoline prices, and estimatesworld prices for gasoline will increase even further due to increasing high demand from India and China.Besides, Cousin Edgar thinks he will make a good profit on the sale of convenience items at each station.But before buying the gas stations, he decides to ask for your advice since you are taking this course inBusiness Economics.You recall reading about making pricing decisions for gasoline on pages 173-174 of the textbook. Youalso recall reading about perfectly competitive markets in Chapter 12, and the need for differentiation inChapter 13. Being skeptical of Cousin Edgar’s optimism on the profitability of selling gasoline andconvenience items, you decide to research the market in terms of supply and demand, elasticity, costs ofproduction, pricing, and normal profit. You want to provide Cousin Edgar with the most informed advicepossible. Situation DAfter hearing of your taking this course in Business Economics, your college friend has emailed youasking for advice on opening a restaurant. Your friend Rajeev reminded you of his popular recipes forIndian food, and shared his dream of building a franchise business modeled on the P.F. Chang chain ofrestaurants. He reckons that creating special fusion recipes based on a popular ethnic cuisine will providethe restaurant chain with sufficient differentiation to become profitable and to grow nationwide.Luckily before you could find time to answer Rajeev’s email, you read the pieces on Starbucks andopening a restaurant, on page 425 of the textbook. Recognizing the costs and risks for Rajeev, you decideECON545 Paper Project 1 Page 3 of 6 to research the market in terms of supply and demand, elasticity, production costs, pricing, normalprofit, and the supply chain for ethnic cuisine. You decide to educate yourself about the restaurantbusiness so you can provide Rajeev with the most informed advice possible.Microeconomic Paper as a Professional ReportYour paper should be organized into five parts as listed below.1. Title Page—Name, course, and date2. Introduction to situation, but do NOT copy the scenario. Briefly summarize the situation andidentify the microeconomic issue(s) to be decided from the perspective of the organization.3. Relevant Economic Principles: Determinants of Demand, Supply, etc. and Relevant DataIdentify the variables that are critical in addressing the issue(s). Gather and present the relevant dataon the variables by searching the DeVry Online Library. Ask a librarian for help if needed. Use in-textcitation to report the source(s) of the data. Graphs may be included here.4. Recommendations and Economic JustificationFormulate and present your recommendations for addressing the issue(s) based on the relevant dataand economic principles identified above. Justify your recommendations in terms of the economicimpact on those affected.5. ReferencesList the full references for at least five sources alphabetically in APA format.Grading RubricSection Pointsearned Points Paper Presentation 10 Relevant Data:Demand: 30 points 80 Supply: 50 points DescriptionGood format, citations, lack of spelling errors, etc.Correct Title page and Reference pagesDemand Determinants and Research Data (15 points)Price Elasticity of Demand (10 points)Graph of Demand (5 points) Recommendations 40 Supply Determinants and Research Data (15 points + ProfitMax/Cost of Production Analysis = 20 points for total of 35points)Price Elasticity of Supply (10 points)Supply graph (5 points)What are your recommendations explained by your analysis? Total 130 A quality paper meets or exceeds these requirements ECON545 Paper Project 1 Page 4 of 6 Data Sources1. DeVry Online Library: Data bases for related articlesData bases for industry reports; IBISWorld in particular.ProQuest Statistical Abstracts of U.S.:http://library.devry.edu/pdfs/STATISTICAL_ABSTRACTS__US.pdf 2. Industry Associations Association of American Medical Colleges: https://www.aamc.org/American Medical Association (AMA): http://www.ama- assn.org/amaCouncil on Graduate Medical Education (COGME): http://www.hrsa.gov/advisorycommittees/bhwadvisory/cogme/National Center for Health Statistics (NCHS): http://www.cdc.gov/nchs/Solar Energy Industries Association: http://www.seia.org/The Solar Foundation: http://www.thesolarfoundation.org/The National Restaurant Association: http://www.restaurant.org/NACS – The Association for Convenience & Fuel Retailing:http://www.nacsonline…./Pages/default.aspx 3. Private Research Groups The Rand Corporation: http://www.rand.org/University of Michigan: http://css.snre.umich.edu/; http://www.sca.isr.umich.edu/The Conference Board: https://www.conference- board.org/data/bcicountry.cfm?cid=1OECD: http://www.oecd.org/eco/economicoutlook.htmIMF: http://www.imf.org/external/pubs/ft/weo/2015/01/ 4. U.S. Government Websites: Statistical Abstracts of U.S.:https://catalog.data.gov/dataset/statistical-abstract-of-the-united- ECON545 statesInternational Trade Administration: http://www.trade.gov/National Renewable Energy Laboratory: http://www.nrel.gov/National Center for Health Statistics: http://www.cdc.gov/nchs/U.S. Department of Energy: http://www.energy.gov/U.S. Energy Information Administration: http://www.eia.gov/Paper Project 1Page 5 of 6 Bureau of Labor Statistics: http://www.bls.gov/Bureau of Economic Analysis: http://www.bea.gov/Lawrence Berkeley National Laboratory (Berkeley Lab): https://www.lbl.gov/U.S. Census Bureau: http://www.census.gov/;http://www.census.gov/econ/bes/; http://www.census.gov/economic- indicators/U.S. Department of Commerce: http://www….merce.gov/;http://export.gov/; http://business.usa.gov/; http://www.esa.doc.gov/content/indicatorsStatistical Abstracts of U.S.:https://catalog.data.gov/dataset/statistical-abstract-of-the-unitedstates; https://catalog.data.gov/dataset?q=business+expense&sort=none&ext_location=&ext_bbox=&ext_prev_extent=-142.03125%2C8.754794702435617%2C59.0625%2C61.77312286453146 ECON545 Paper Project 1 Page 6 of 6