ECON545: Project 1—Microeconomic Analysis

 

The Microeconomic Paper tests your ability to apply economic principles to a business decision. Select one situation from the items outlined below: A to D. Complete the paper on the selected situation as specified below. The completed paper is a professional report and is due in Week 3 (230 points). See the grading rubric at the end of this document. Be sure to use the DeVry library for finding data; avoid questionable sources, such as Wikipedia.

 

The following is a list of the specific required information, research, graphs, and math to be included in each answer regardless of the scenario chosen.

 

1.       Demand Determinants:

a.        Each individual determinant analyzed for your situation, with examples applicable to your situation (5 points each) and research (3 points each) showing current Demand data or most recent past data, except for the Expectations Determinant in which you need to use data estimating future market conditions. 

b.       (20 points) Price Elasticity of Demand facing you in your scenario, including actual calculation of it using the midpoint formula. If you can’t find data, then determine the Price Elasticity from the Characteristics and make up numbers to use. Be sure to identify this if you use this approach. This will help you in deciding the slope of your Demand curve below.

c.        (10 points) Graph the Demand facing your situation. Note that this requires information from the Supply Determinant analysis before deciding how to draw the curve(s), as you may need a separate MR curve.

2.       Supply Determinants:

a.        Each individual determinant analyzed for your situation, with examples applicable to your situation (5 points each) and research (3 points each) showing current Supply data or most recent past data, except for the Expectations Determinant in which you need to use data estimating future market conditions. 

                                                                      i.      (40 points) You need to be very specific in the Cost of Production Determinant to identify Fixed, Variable, and Marginal Cost in order to derive your Supply curve for the graphing component. You will need to explain and show how Profit Maximization or Loss Minimization output and price are determined. You will need to do the math using actual figures [cited] or your own estimated figures [identified as such] and explain why you expect Short Run Economic or Normal Profits, Acceptable Loss or temporary Shut Down and how you will know which it is.

                                                                     ii.      The Number of Sellers determinant must contain your analysis of the kind of market structure in which your firm or labor service will be sold.

b.       (20 points) Price Elasticity of Supply you have based on the Cost of Production changes as output changes, including actual calculation of it using the midpoint formula. If you can’t find data, then determine the Price Elasticity from the Characteristics and make up numbers to use. Be sure to identify this if you use this approach. This will help you in deciding the slope of your Supply curve.

c.        (10 points) Graph your Supply situation using the numbers from your earlier Cost of Production 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 A

 

Jenny, your niece, is a smart high-school student who wants to make intelligent choices for her future. Hearing of your course in business economics, she has e-mailed you asking for advice on whether to become a doctor and on the best location to practice it. She recognizes the high costs of tuition and the years of study involved in becoming a doctor. She wants to evaluate if that career choice is an optimal decision for her, so she has asked you for advice.

 

Having read the piece “Fewer Physicians Move, a Sign of Career Caution” on page 20 of the textbook, you recognize the significance of such a career decision for Jenny. You decide to educate yourself about the market for physicians in terms of supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss. You want to provide Jenny with the most informed advice possible.

 

 

Situation B

 

Your neighbor Cindy wants to start a contracting business for installing solar panels. She has heard of the cost savings that households and businesses can make each year by installing solar panels on their roofs. Cindy has also heard of government incentives for installing solar panels. Being concerned about the environment and wishing to reduce pollution, Cindy thinks installing solar panels also serves a good social purpose. But she does not want to risk her life savings on a venture that might not succeed or become profitable enough. After hearing from you about taking this course in business economics, she decides to ask you for advice.

 

At first you are hesitant to give investment advice. Then you read the piece “US boosts ‘game-changer’ solar technology in bid for global market share” on page 374 of the textbook. You realize there are more pieces to the decision than Cindy is considering. You decide to research the market in terms of supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss. You want to provide Cindy with the most informed advice possible.

 

 

Situation C

 

Cousin Edgar is always thinking of the next business idea. This time, he plans to invest in buying two gas stations. He reckons American consumers have come to accept the high gasoline prices, and estimates world prices for gasoline to increase even further with 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 because you are taking this course in business economics.

 

You happened to read the piece “$4-a-Gallon Gas Fueling Fears for Recovery” on page 196 of the textbook. Being skeptical of Cousin Edgar’s optimism on the profitability of selling gasoline and convenience items, you decide to research the market in terms of supply and demand, elasticity, costs of production, pricing, and normal or economic profit or loss After hearing of you taking this course in business economics, Uncle Dan has e-mailed you asking for advice on his 100-acre corn farm. He mentioned how, after 30 years of growing corn, he wishes to leave that commodity’s market and enter a more profitable market instead. He is thinking of planting some organic crop. But he is not sure which crop would be most profitable. He already knows that going organic requires changing some of his practices to qualify for the certification. Therefore he wants to know how much it costs to become a certified organic farmer, and which crop would be best suited for him to grow given his current equipment.

 

Luckily before you can find time to answer Uncle Dan’s e-mail, you read the piece on organic farming in the United Kingdom on page 422 of the textbook. Recognizing the costs and risks for Uncle Dan in making the switch, you decide to research the market in terms of supply and demand, elasticity, production costs, pricing, and economic or normal profit or loss. You decide to educate yourself about organic farming so that you can provide Uncle Dan with the most informed advice possible.

. You want to provide Cousin Edgar with the most informed advice possible.

 

 

Situation D

 

 

 

Microeconomic Paper as a Professional Report

Your paper should be organized into five parts as listed below.

 

1.       Title Page—Name, course, and date

2.       Introduction to situation, but do NOT copy the scenario. Briefly summarize the situation and identify the microeconomic issue(s) to be decided from the perspective of the organization.      

 

3.       Relevant Economic Principles: Determinants of Demand, Supply, etc. and Relevant Data

Identify the variables that are critical in addressing the issue(s). Gather and present the relevant data on the variables by searching the DeVry Online Library. Ask a librarian for help if needed. Use in-text citation to report the source(s) of the data. Graphs may be included here.

 

4.       Recommendations and Economic Justification

Formulate and present your recommendations for addressing the issue(s) based on the relevant data and economic principles identified above. Justify your recommendations in terms of the economic impact on those affected.

 

5.       References

List the full references for at least five sources alphabetically in APA format.

 

 

Grading Rubric

 

Section	Points earned	Points	Description
Paper Presentation		10	Good format, citations, lack of spelling errors, etc.; correct Title page and Reference pages
Relevant Data: Demand: 70 points   Supply: 110 points		180	Demand Determinants and research data (40 points) Price Elasticity of Demand (20 points) Graph of Demand (10 points)   Supply Determinants and research data (40 points + Profit Max/Cost of Production analysis = 40 points for total of 80 points) Price Elasticity of Supply (20 points) Supply graph (10 points)
Recommendations		40	What are your recommendations explained by your analysis?
Total		230

 

 

Abe Forrester and three of his friends from college have interested a group of venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonio. To finance the new venture two plans have been proposed. Plan A is an all-common-equity structure in which 2.3 million dollars would be raised by selling 84,000 shares of common stock. Plan B would involve issuing 1.1 million dollars in long term bonds with an effective interest rate of 11.7% plus a 1.2 million would be raised by selling 42,000 shares of common stock. The debt funds raised under plan B have no fixed maturity date, in that this amount of financial leverage is considered a permanent part of the firms capital structure. Abe and his partners plan to use a 40% tax rate in their analysis, and they have hired you on a consulting basis to do the following: A. Find the EBIT indifference level associated with the two financing plans. B. Prepare a pro forma income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regardless whether Plan A or Plan B is chosen

During season 8 of a reality show, the winner lost 55.6% of his body weight. If he weighed 410 pounds at the start of the show, what was his weight at the end of the show?

Assignment 2: RA 1: Spy Case from PERSEREC

You work as a mental health professional in an organization that is examining methods to avoid potential intelligence compromises. You have been asked to evaluate an existing spy case in order to achieve a greater working knowledge of the motivation of espionage in an effort to avoid future compromises in the organization.

In a formal report, conduct an evaluation and case conceptualization. Identify the risk factors, vulnerabilities, and threats; identify the potential mental disorders, symptoms, and prognoses; and explain how this type of indirect assessment relates to the ethics code as prescribed by APA.

Tasks:

Create an 8- to 10-page report responding to the following:

• Select a spy case from the Defense Personnel and Security Research Center (PERSEREC) case page. You cannot select a case that has already been examined or discussed in this course.
• Conduct a case study evaluation and case conceptualization of your selected spy case as described below.
• For the case study evaluation:
• Summarize the case facts. Include not only the case details as outlined by evidence and a description of the act but also the characteristics of the perpetrator, such as demography, socioeconomic status, work history, and relation with the intelligence community (IC) organization where the espionage occurred. Articulate what, where, when, how, and who of the act of espionage in the case you have chosen.
• Identify the risk factors and vulnerabilities in the spy and the threats of the case. Risk factors and vulnerabilities are intrinsic to the perpetrator and include factors that made the perpetrator more susceptible to committing the act of espionage. Threats are extrinsic to the perpetrator and bring dangers to the asset. In these cases, the asset is national security information.
• For the case conceptualization:
• Describe the cognitive processes, behavior, and emotional makeup of the spy, such as how he or she thinks, acts, or feels, using a major theoretical orientation on personality psychology (such as cognitive behavioral and psychodynamic behavioral).
• Identify any potential mental disorders or symptoms that may exist and include them in your prognosis.
• Explain how this type of indirect assessment meets (or does not meet) the ethics code as prescribed by APA. This section should be supported by the existing body of psychology literature.

The report should rely upon at least five scholarly resources from the professional literature. The literature may include the Argosy University online library resources; relevant textbooks; peer-reviewed journal articles; and websites created by professional organizations, agencies, or institutions (.edu, .org, or .gov).

Submission Details:

• By Wednesday, August 6, 2014, save your report as M3_A2_Lastname_Firstname.doc and submit it to the M3 Assignment 2 RA 1 Dropbox.

Based on the readings from the course text, please identify the leadership traits, skills, and behaviors that you consider the most important in leading and motivating subordinates. Examine specifically why you selected the traits, skills and behaviors in relation to employee motivation.