Comparative Advantage: Discuss the Comparative Advantage (With Trade) simulation that you played in Module Two. You should add the Production Decisions graph and the Production Trade graph (i.e., the graph showing how many hamburgers per fries) from you simulation report into the project template as Figures 1.1 and 1.2. Then, answer the following questions in the paragraphs below the figures:
How does this simulation demonstrate how individuals evaluate opportunity costs to make business decisions? Use the Production Decisions graph from the simulation as a reference to explain what role the production-possibility frontier (PPF) has in the decision-making process.
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.
Competitive Markets and Externalities: Discuss the Competitive Markets and Externalities simulations (both with and without policy interventions) that you played in Modules Three and Four. Add the Supply and Demand chart and the Outcomes by Market table from your simulation reports into the project template as Figures 2.1 and 2.2. Then, answer the following questions in the paragraphs below the figures:
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: Discuss the Production, Entry, and Exit simulation that you played in Module Five. Add the Aggregate Outcomes chart from your simulation report into the project template as Figure 3.1. Then, answer the following questions in the paragraphs below the figure:
Analyze a business owner’s decision making regarding whether to enter a market. For example, what factors determined the driver’s market entry and exit 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: Discuss the market structures simulations (Price Discrimination and Cournot) that you played in Modules Six and Seven. Then, do the following in the project template:
Complete Table 4.1 as a reference guide for your business partner. The table should compare the attributes of each of the four listed market structures.
Answer the following questions in the paragraphs below the table:
Explain what market inefficiencies derive from monopolies and monopolistic competition. Use examples from the textbook to support your claims.
How do firms in an oligopolistic market set their prices? Use specific examples from the simulations or from the textbook to support your claims.
Explain how firms that compete in the four different market structures determine profitability. Use specific examples from the simulations or 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.
