ECO 201 Project Template

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Southern New Hampshire University *

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T3332

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Economics

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Jan 9, 2024

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ECO 201 Project Template [Throughout this template, replace the content in bracketed text with your own responses, and deleted any bracketed instructions (including these).] [The Introduction section of your report is provided and should remain standard in all submissions.] [The placeholders for your data visualizations (e.g., charts, graphs, and tables) should be replaced with the appropriate indicated images in each case. To create an isolated image from the simulation data, it is recommended that you use a snipping tool to copy and paste your data visualizations into this template. See How to Use the Snipping Tool (Beginner’s Guide) for more information if you use a PC. A captioned version of this video is available: How to Use the Snipping Tool (Beginner’s Guide) (CC) . Or, see Is There a Snipping Tool for Mac? .] Memo To: My Business Partner From: Major Cephas Date 08/21/2022 Re: Microeconomics Simulations Introduction This memorandum report identifies and explains key microeconomic principles using a set of simulation games. The outcome of these games illustrate how microeconomic principles can be applied within real-life situations to help us make better business decisions. This report is a summary of the simulations I played and their results, which include the key takeaways and their significance, for your review and reference. It is divided into the following sections: 1. Comparative Advantage 2. Competitive Markets and Externalities 3. Production, Entry, and Exit 4. Market Structures (including the Price Discrimination and Cournot simulations) 5. Conclusions 6. References

Comparative Advantage Figure 1.1

1.The definition of opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen: "Idle cash balances represent an opportunity cost in terms of lost interest". If the cost of the decision outweighs the benefits of the business, we may not go forward with the decision. We can also compare the price of our other competitors, if the cost is too low for our competitors, then we will have the advantage over them comparative advantage is the ability to

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produce goods at a lower price then our competitors. This will help us to have the advantage against our competitors. We can also use each other practices for the benefits of both companies using trades. It’s impossible for some one to have a comparative over another with all the products as shown with the simulation. If we trade with good, we should have the advantage. The production possibility frontier model is a graph that shows he combination of outputs that the economy can possibly produce given the available factors of production and the available production technology. IF we take a look at the PPF model regarding specialization and trade we can use the models to shoe the different amount of outputs the company is able to produce.

Competi tive Markets

ts and Externalities

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Figure 2.2 [Insert your responses to the following questions: What impact do policy interventions have on the supply and demand equilibrium for a product? Provide specific examples from the simulation to illustrate.]

[What are the determinants of price elasticity of demand? Identify at least three examples. Based on the outcome of the simulation, explain how price elasticity can impact pricing decisions and total revenue of the firm.] [Based on the results of the simulation, can policy market interventions cause consumer or producer surplus? Explain why using specific reasoning.]

Production, Entry, and Exit

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Figure 3.1 [Insert your responses to the following questions: Analyze a business owner’s decision making regarding whether to enter a market. For example, what factors determined the driver’s entry and exit into the market in the simulation? Use economic models to support your analysis.] [How does a business owner applying the concept of marginal costs decide how much to produce? For example, how did the driver determine how many hours to drive each day? Use economic models to explain.] [How does the impact of fixed costs change production decisions in the short run and in the long run? Use the average-total-cost (ATC) model included in the module reading chapters to demonstrate this impact.] Market Structures [Complete the table by selecting the appropriate response from the drop-down select menu within each cell, except for the final column in which you will enter your text-based response.] Market Structure Number of Firms Type of Product Sold Price Taker? Price Formula Freedom of Entry? Short-run Profit? Long-run Profit? Industry Examples Perfect Competition Agriculture, Beef, Fish Monopolistic Competition Movie, Restaurants Monopolies Tap water companies Oligopolies Cigarettes, Cars Table 4.1 One reason for market inefficiency in a monopoly is because a monopoly is the sole producer in it market, its demand curve is simply the market demand curve. If a monopolist wants to raise the price of there product consumers will buy less which will affect the monopoly’s profits. Another form of inefficiency is monopolized markets, price exceeds marginal cost. This is inefficient for the market because for the market to be acceptable to the supplier the price of goods may become unfavorable to the consumers and vice versa. Therefore, the market will become unfavorable. These of a monopoly are measured with a deadweight loos triangle. In a monopolistic competition, several businesses offer comparable goods. Inefficiency in this market lies in the long run because, ultimately the profit goes down to zero. This is caused by companies’ ability to freely enter and exit the market depending on the current profit levels, often resulting in a imperfect number of firms in the market.

Firms in perfect competitive and monopolistic market structures determine their profitability by determine where their total revenue from sales exceeds their total cost of production because their pricing has an insignificant amount of market power as see in perfectly competitive market power or their market value is restricted by the lack of competing firms as seen in monopolistic markets. Meanwhile because firms in monopolistic competition market structures have some market power their prices exceed marginal cost. Oligopolistic firm expects to determine the profitability the same as monopolistic competitive firms however each oligopolist is tempted to raise production and capture a large share of the market. As each of them tries to do this total production rises and the prices fall Conclusions In conclusion microeconomics provides insight that are often overlooked by the accounting side of a business. As a future business owner we should not only take into consideration if sale can overcome the cost of production, but also how it will compare to other firms on the market, the elasticity of the product and any opportunity cost, society’s cost. References Mankiw, N. G. (2021). Principles of microeconomics (#9 edition). Cengage. [Add other citations, as needed, in APA format ].

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