Project Guidelines and Rubric
Competencies
In this project, you will demonstrate your mastery of the
following competencies:
Inform business decisions using microeconomic models and
theories
Determine the impact of economic costs on organizational and
individual decision making
Explain how market structure impacts a business’s entry and
exit into a market and its ability to generate economic profit
Scenario
You and your friend from college have just graduated. You
majored in business, and your friend majored in a creative field.
Your friend is highly inventive and has come up with an excellent
idea for a new product. You both believe in this idea so much that
you have agreed to become business partners. However, before you
embark on your entrepreneurial adventure, you will have to explain
some key microeconomics concepts to your partner that are important
to make sound business decisions.
Your business partner is less than enthusiastic about this
prospect and has never had an interest in what is often described
as the dry and boring field of economics. Every time you have tried
to engage your partner in practical discussions, they brush you off
and decide to go play video games instead.
Aha! This gives you an idea: What if you could convince your
friend to learn about economics through games? You have found
several simulation games that demonstrate in real and interesting
ways the economic principles that you know your partner needs.
begin drafting your memorandum report by completing the
following steps:
1. Comparative Advantage:
a. How do individuals
evaluate opportunity costs to make business decisions?
explain what role the production-possibility frontier (PPF) has in
the decision-making process.
b. Explain how comparative advantage impacts
a firm’s decision to engage in trade. Would a business’s
decision to trade cause a change to its PPF? Provide specific
reasoning to support your claims.
2. Competitive Markets and Externalities:
a. What impact do policy interventions
have on the supply and demand equilibrium for a product?
b. What are the determinants
of price elasticity of demand? Identify at least three
examples. Explain how price elasticity can impact pricing decisions
and total revenue of the firm.
c. Can policy market
interventions cause consumer or producer surplus? Explain why using
specific reasoning.
3. Production, Entry, and Exit:
a. Analyze a business
owner’s decision making regarding whether to enter a
market. Use economic models to support your analysis.
b. How does a business owner applying the
concept of marginal costs decide how much to produce? Use
economic models to explain.
c. 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.
4. Market Structures:
a. Explain what market inefficiencies derive
from monopolies and monopolistic competition. Use examples
from the textbook to support your claims.
b. How do firms in an oligopolistic
market set their prices? Use specific examples from the
simulations or from the textbook to support your claims.
c. Explain how firms that compete in the
four different market structures determine profitability. Use
specific examples from the textbook to support your claims.
Conclusions: Draw your overall conclusions about the relevance and significance of microeconomics. How will microeconomics principles impact your business decisions moving forward? Provide recommendations to your business partner for your future business venture.
Finally, ensure that all of your sources are properly cited using in-line citations and references according to APA format.
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