ECO 415 Week 1

Individual Basic Concepts Paper

Resource: Supply and Demand simulation located on your student website

Write a 1,050- to 1,400 word paper that discusses basic concepts in applied economics in the context of the simulation. Answer the following questions in the paper:

How do changes in the business environment cause changes in supply and demand? Cite and explain at least two examples from the simulation.

Why is marginal analysis used when making business decisions? How is marginal analysis used to respond to shifts in supply and demand? Cite and explain at least one example from the simulation.

How did your team determine appropriate output levels in the simulation? Cite at least two examples. Were your teams output decisions successful? If so, explain specifically how your decision making process led to financial success. If not, identify any mistakes and explain what your team could have done differently.

What fixed and variable costs does the operating company in the simulation have? Cite at least two examples for each.

Describe a market situation in which the operating company faces economic difficulties and the need to cut costs. What cost cutting strategies might the operating company use to remain profitable? What would be the benefits and drawbacks of each?

Format your paper consistent with APA guidelines.

Discussion Questions

Why do you believe that it is important for managers to understand both short run and long run supply and demand? Cite one hypothetical or real life example that illustrates your response.

Under what circumstances would it be appropriate to resort to plant closings or layoffs? Develop a guideline and explain how it may help a manager make this type of decision.