Components-
The model
The decision- identify a decision you make in daily life
It must be a decision you can analyze using marginal analysis
No all-or-nothing decisions
The decision must have a scarce resource that is not money or time
Components to include
Identify the costs and benefits associated with the decision
You will need to be able to discuss both at the margin (MB and MC)
Identify the relative sizes of MB and MC for your decision
You do not need to put numbers to these functions, but should consider if they have a large or small slope (relative to each other) and a reasonable y-intercept for both
Identify a shift that changes either MB or MC
I highly recommend considering a shift that only changes costs or benefits, not both
It will make the modeling easier for you, but it is not a requirement
Identify the results of your model
Identify the equilibrium of the decision before the shift
This is the choice you make
It does not need to include numbers or units, but must be shown on the graph
Be sure to discuss how the shift impacts your decision (how does quantity change) and how it changes surplus
In other words how does the shift change the equilibrium and the impact on the surplus of the decision.
Include appropriate economics terminology that relate to your decision.
There is no maximum or minimum and will depend on the decision you chose
You should think about all the concepts we have covered to determine which are appropriate to relate to your decision
You are welcome to include concepts we have not covered as well, but it is certainly not required nor expected
Be sure to define the terminology you use!
You will describe your model and results from it in the paper (described below)
All of the items described above should be included in the paper.
The graph
You must include at least one graph depicting the marginal analysis of the decision
It should show MB and MC over a range of quantities
It should identify the equilibrium
It should include the shift and identify how it changes the equilibrium
Graph(s) should be included at the end of the paper or as a separate document
You must discuss your graph within the paper to help explain the decision, the shift, and the impact of the shift on your choice (quantity) and surplus from the decision
The paper
Your paper is where you explain your analysis
It should include a complete description of your model and the results of it
See section 1!
It must discuss the graph to help explain the analysis
See section 2!
Organization – this is a recommended format to help you, but is not a strict rule. You can ignore it (or portions of it) if you think it makes sense!
Paragraph 1 – short introduction (~1/4 page maximum)
Briefly explain the decision you are analyzing and the shift you are considering
Paragraph 2 – Identify MB and MC (~1/3-2/3 page)
Discuss the incentives (costs and benefits) that impact the decision
Discuss what is meant by quantity and the scale of the decision
Is it a choice you make in one day? One month? The whole year? One hour?
Discuss the shift and how it changes MB or MC
Paragraph 3 – Results (~1/2-3/4 page)
Explain your initial equilibrium
Again, you do not need to quantify this as a number.
You should discuss your graph to help explain the equilibrium
Discuss how the shift changes the optimal choice (the equilibrium)
Discuss how the shift changes the surplus
Are you made better or worse off due to the shift? How do you know?
No conclusion is necessary!
Formatting requirements
1-2 pages (going under 1-page or over 2-pages will both get points marked-off)
The graph does not count toward the page limit and should be included at the end of the paper
Double-spaced
11-12 point font
1” margins
