Assignment: Microeconomic Analysis Paper
Overview
There are two parts to the project in this course. For your first project, you will produce an individual microeconomic analysis paper related to a publicly traded company that you will choose from a given list. This paper will equip you with the knowledge and skills required to analyze the effects of microeconomic factors on a company's supply and demand, product market, production and costs, competitive environment, business strategy, and financial performance.
(For your second project, you will produce an individual macroeconomic analysis paper related to the publicly traded company chosen for the first project. The focus of the macroeconomic analysis will be on the United States. You will come away with the knowledge and skills necessary to evaluate how macroeconomic conditions impact a product's or service's supply and demand as well as a company's financial performance. For details of that project, please review the Project Part II Guidelines and Rubric document.)
In today's business world, it is vital for companies to carefully assess their markets and competitive environment and operate efficiently. A critical skill for business managers is the ability to effectively assess the effects of microeconomic factors on the supply and demand of a company's products and services as well as on a company's business strategy and financial performance.
For this first project, you will produce a microeconomic analysis related to a publicly traded company chosen from the following list:
a) Apple
b) Exxon Mobil
c) Johnson & Johnson
d) Procter & Gamble
e) Wal-Mart
Alternatively, you may select a company of your choosing with instructor approval. Instructor approval should be secured through university email. To begin your analysis, you will choose a type of product or service offered by your chosen company, ensuring that this product or service relates to one specific sector in which the company operates (e.g., Apple operates in the tablet industry and the smartphone industry). Next, you will apply microeconomic concepts as well as gather and analyze information related to your chosen company's supply, demand, market equilibrium, production, costs, and the market structure of the specific industry selected. Finally, you will assess the effects of the industry's market structure on the company's business strategy and financial performance.
The project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality submissions. These milestones will be submitted in Modules Three and Five. Project Part I will be submitted in Module Seven.
This project addresses the following course outcomes:
a) Determine the extent to which price and nonprice factors affect the supply and demand of a company's products or services by applying elasticity concepts
b) Predict the effect of changes in supply and demand on the market equilibrium for informing business decisions
c) Analyze the factors that affect the combination of inputs in the production function of products or services for informing production decisions
d) Assess how the type of market structure impacts the business strategies and financial performance of companies for informing business decisions
Part I Prompt
Your individual microeconomic analysis paper should respond to the following prompt: Assess how microeconomic variables impact (1) your chosen product's or service's supply, demand, market equilibrium, production, and cost; (2) the market structure of the industry in which your chosen company operates; and (3) your company's business strategy and financial performance.
Specifically, the following critical elements must be addressed:
1) Overview: Provide an overview consisting of a brief description of the chosen company and your chosen product or service, including the industry the product or service falls under. You should include key details about the company, including its main products and/or services, number of employees, and annual sales.
2) Supply, Demand, and Market Equilibrium
i. Determine the extent to which the supply and demand of your chosen product or service are sensitive to changes in price by applying the concept of elasticity. In other words, what is the price elasticity of supply or demand for your product or service?
ii. Select two nonprice factors that impact the demand of your chosen product or service. Justify your selections.
iii. Select two nonprice factors that impact the supply of your chosen product or service. Justify your selections.
iv. Define the industry related to your chosen product or service and the market equilibrium associated with the product or service.
v. Predict the effect of changes in supply and demand on the market equilibrium.
vi. Based on the predicted changes, what decisions related to supply and demand for your product or service would you make?
3) Production and Costs
i. Describe three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product or service. One example of an input is machines, which are fixed costs. Keep in mind that all inputs will either fall under fixed or variable cost.
ii. Analyze the factors that impact your choice of inputs to produce the chosen product or service. For example, how would a change in the price of raw materials impact the combination of inputs?
iii. Based on this analysis, what production decisions would you make? Be sure to support your decisions with examples or data.
4) Market Structure
i. Determine whether the market structure of the industry in which your chosen company operates is perfectly competitive, monopolistically competitive, oligopolistic, or monopolistic. Justify your response.
ii. Assess how the type of market structure impacts your chosen company's financial performance as measured by performance variables over the past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over time.
iii. How would possible changes in the industry's market structure impact your chosen company's business strategy in the future? Keep your company's current business strategy in mind in your response.
Milestones
Milestone One: Supply, Demand, and Market Equilibrium
In Module Three, you will submit the supply, demand, and market equilibrium component of your microeconomic analysis paper. This milestone should be a 2 to 3 pages paper structured as follows: First, it describes the price elasticity of supply or demand for your product or service. Second, it explains how two nonprice factors impact the demand of your chosen product or service. Third, it explains how two nonprice factors impact the supply of your chosen product or service.
Fourth, it defines the industry and the market equilibrium associated with the product or service. Fifth, it predicts the effect of changes in supply and demand on the market equilibrium. Finally, it describes the decisions related to supply and demand for the product or service that you would make based on the predicted changes in supply and demand on the market equilibrium.
Milestone Two: Production and Costs
In Module Five, you will submit the production and costs component of your microeconomic analysis paper. This milestone should be a 3 to 4 pages paper structured as follows: First, it describes three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product or service. Second, it analyzes the factors that impact your choice of inputs to produce the chosen product or service. Third, it examines the production decisions that you would make based on the analysis of the factors impacting the choice of inputs to produce the chosen product or service.
Submission: Microeconomic Analysis Paper
In Module Seven, you will submit your microeconomic analysis paper. It should be a complete, polished artifact containing all of the critical elements of Project Part I, including Sections I and IV, which were not covered in the milestones. The submission should first determine whether the market structure of the industry in which your chosen company operates is perfectly competitive, monopolistically competitive, oligopolistic, or monopolistic. Justify your response. Second, it should assess how the type of market structure impacts your chosen company's financial performance as measured by performance variables over the past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over time. Finally, your paper should answer the following question: How would possible changes in the industry's market structure impact your chosen company's business strategy in the future? Keep your company's current business strategy in mind in your response. The microanalysis paper should reflect the incorporation of feedback gained thus far in the course.
Format your assignment according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.