Project Description <\/p>\n
This project is designed for you to apply many of the economic principles learned in your economics classes to a real-world business application. Specifically, you will choose a publicly traded company (or at least on that has widely available info) that has recently (in the last few years) launched a new product. Your team (ideally four members) will then act as project managers and prepare a paper and presentation to the board of directors of this company. All members will agree on the project.1 I will provide a list of key economic concepts, ranging from price elasticity of demand to adverse selection. You are expected to include at least 20 of these. Each concept MUST BE APPLIED, with corresponding citations. Describing the concept is not sufficient: you MUST show how each concept applies to the profit-maximizing behavior of the firm\/product. You will have the opportunity to present your report to the entire class in the last weeks of class.<\/p>\n
More Details <\/p>\n
You are expected to discuss the main features of the industry (not just the firm and product) and are encouraged to explore the strategic interactions in the selected company\u2019s industry. You should also highlight the global context that this firm engages in. You are further encouraged to take on questions related to ethics and sustainability. Again, your project needs to clearly be directed to the board of directors (unless you follow footnote 1, in which case you\u2019ll need to have a discussion with the professor). The report should have 3\u20135 (or more) sections to provide structure and organization; it should NOT have 20. Instead, the 20 concepts should be brought seamlessly into the sections. While not every paragraph\/sentence has to touch on one of the 20 concepts, every paragraph\/sentence should support the purpose for the report and the section. To assist you and me, please bold the concepts when you first introduce them. Also, you should have an Appendix A (or similar) in which you provided a numbered list of all 20 concepts in the order they are introduced. The paper should follow APA formatting and citation rules. These include double-spaced, letter-size paper, 12-pt font and 1-inch margins. Further, there are clear guidelines regarding bibliography, in-text citations and more. You can find embedded citations in both Google Docs (Tools > Citations) and Microsoft Word (References > Insert Citation) that you should use. Plagiarism will result in severe penalties (up to a zero on the project). The simplest way to avoid it is to cite the source you are referencing. Note two important cases: 1) if you are taking ideas from a source, but not taking quotes\/words, then you simply need to include a citation (see APA guide above); 2)if you are taking direct quotes from a source then you must include a citation AND put the quote in quotations marks. If you are worried about including a source because it is low-quality, then you should probably find another source. You will provide an executive summary, instead of an abstract. This is NOT an introduction, rather it is an overview of the entire document: there should be nothing in the executive summary that isn\u2019t also in the main document. The final project will be between 15\u201325 pages in length. This is text only; tables, figures and references will go beyond this limit. You will have the opportunity to present your report to the entire class in Week 12. This will be a 15\u201320-minute presentation, and points will be lost for going too much over. You will not have time to cover the entire paper, so instead focus on the most important takeaways. You will, however, have additional time to field questions from your audience.<\/p>\n
Examples<\/p>\n
Sample 1 <\/p>\n
Tesla can benefit from economies of scope. Economies of scope means using the same factory for more than 1 product. (No points: incorrect explanation of concept and doesn\u2019t apply it to the firm) <\/p>\n
Sample 2 <\/p>\n
Tesla can benefit from economies of scope. Economies of scope implies that the costs of two separate product lines is higher than the cost of one integrated production operation for the two product lines. (No points: while that is a true statement, it still doesn\u2019t apply the concept to the firm) Sample 3 <\/p>\n
The Giga factory, which will produce batteries for cars as well as America\u2019s 50 million households, can help Tesla to achieve economies of scope. The costs of a combined operation for these related product lines should be less than the costs of operating. (No points: missing necessary citations; should cite Tesla (that the costs will be reduced) and the US Census (where you could find that there are more than 50M US households) <\/p>\n
Sample 4 <\/p>\n
The Gigafactory will produce batteries for cars as well as households (Tesla, 2015). As the costs of a combined operation for these related product lines should be less than the costs of operating separate production processes, one expects economies of scope for Tesla (Medium, 2014). (Full points: valid and helpful application and has correct citations.<\/p>\n
Key Concepts List<\/p>\n
Each bullet point counts as ONE potential concept. Use concepts from the whole course. As such, try to use at least one concept from each week, noting that you do not HAVE to use concepts from the macro weeks (weeks 12 and 13) given the due date of the project. <\/p>\n
Week1: Introduction, Supply, Demand <\/p>\n
\u2022 The One Lesson of Business <\/p>\n
\u2022 Demand (Shifts, Movements) <\/p>\n
\u2022 Supply (Shifts, Movements) <\/p>\n
\u2022 Market Equilibrium\u2013 NB: A successful way to bring in Supply and Demand and Market Equilibrium is to discuss actual shocks to the industry and how it has impacted the firms. <\/p>\n
Week2: Costs <\/p>\n
\u2022 Fixed and Variable Costs <\/p>\n
\u2022 Sunk Costs <\/p>\n
\u2022 (Implicit) Opportunity Costs <\/p>\n
\u2022 Average Costs <\/p>\n
\u2022 Law of Diminishing Marginal Product \u2022 Returns to\/Economies of Scale <\/p>\n
\u2022 Economies of Scope <\/p>\n
Week3: International Trade <\/p>\n
\u2022 Comparative Advantage <\/p>\n
\u2022 Tariffs and Import Quotas <\/p>\n
Week4: Marginal and Break-Even Analysis <\/p>\n
\u2022 Marginal Analysis; MR vs MC <\/p>\n
\u2022 Net-Present Value <\/p>\n
\u2022 Break-Even Analysis <\/p>\n
\u2022 Shut-Down Analysis <\/p>\n
Week5: Pricing and Elasticity <\/p>\n
\u2022 Price Elasticity of Demand <\/p>\n
\u2022 Income Elasticity of Demand (normal, inferior, luxury) <\/p>\n
\u2022 Cross-Price Elasticity of Demand (substitutes, compliments) <\/p>\n
\u2022 Optimal Mark-up Rule\u2013 NB: Remember to apply these concepts to profit-maximizing behavior, not simply say what these are for the product. <\/p>\n
Week6: Risk, Data <\/p>\n
\u2022 Uncertainty\/Risk <\/p>\n
\u2022 Risk Premium <\/p>\n
\u2022 Risk Aversion <\/p>\n
\u2022 Surveys, Controlled Market Data, Uncontrolled Market Data <\/p>\n
\u2022 Difference-in-difference <\/p>\n
\u2022 Selection Bias <\/p>\n
Week7: Markets I <\/p>\n
\u2022 Perfect Competition <\/p>\n
\u2022 Monopolistic Competition <\/p>\n
\u2022 Oligopoly <\/p>\n
\u2022 Monopoly\u2013 NB: Likely only the market type that best describes the product\u2019s market should make it into the paper. <\/p>\n
\u2022 Barriers to Entry <\/p>\n
\u2022 Indifference Principle <\/p>\n
\u2022 Antitrust Laws, Enforcers<\/p>\n
Week8: Markets II <\/p>\n
\u2022 Concentration Ratio and\/or HHI <\/p>\n
\u2022 (Sustainable) Competitive Advantage <\/p>\n
\u2022 Porter\u2019s Five Forces (counts as 3 concepts!) <\/p>\n
\u2022 Resource-Based View \u2022 Price Wars <\/p>\n
\u2022 Prisoner\u2019s Dilemma <\/p>\n
\u2022 Price Fixing and\/or Cartels <\/p>\n
\u2022 Mergers and\/or Acquisitions <\/p>\n
Week9: Strategic Decision Making <\/p>\n
\u2022 Game Theory <\/p>\n
\u2022 Nash Equilibrium <\/p>\n
\u2022 Repeated Games and\/or Trigger Strategies<\/p>\n
\u2022 First- and\/or Second-Mover Advantage <\/p>\n
\u2022 Nonstrategic View of Bargaining \u2022 Market Division (Antitrust) <\/p>\n
Week10: Pricing for Greater Profit <\/p>\n
\u2022 Direct Price Discrimination <\/p>\n
\u2022 Indirect Price Discrimination (Versioning, Metering, Volume Discounts, Bundling) <\/p>\n
\u2022 Laws and Price Discrimination (Robinson-Patman, Protected Groups) <\/p>\n
\u2022 Pricing of Commonly Owned Products <\/p>\n
\u2022 Advertising <\/p>\n
\u2022 Psychological Pricing <\/p>\n
Week 11: Asymmetric Information, Organizational Design <\/p>\n
\u2022 Adverse Selection <\/p>\n
\u2022 Moral Hazard <\/p>\n
\u2022 Agency Cost <\/p>\n
\u2022 Signaling and\/or Screening (for Adverse Selection!) <\/p>\n
\u2022 Principal-Agent Problem <\/p>\n
\u2022 Incentive Pay <\/p>\n
\u2022 Franchising <\/p>\n
\u2022 Firm (De)Centralization <\/p>\n
\u2022 Vertical Integration <\/p>\n
\u2022 Double Marginalization <\/p>\n
\u2022 Vertical Resale Price Maintenance <\/p>\n
Weeks 12\u201313: Macro <\/p>\n
\u2022 Inflation <\/p>\n
\u2022 GDP (Nominal and Real) <\/p>\n
\u2022 Interest Rates (Nominal and Real) <\/p>\n
\u2022 Unemployment <\/p>\n
\u2022 Phillips Curve <\/p>\n
\u2022 Expectations <\/p>\n
\u2022 Monetary Policy <\/p>\n
\u2022 Fiscal Policy <\/p>\n
\u2022 Balance of Payments <\/p>\n
\u2022 Money Multiplier <\/p>\n
\u2022 Income Multiplier <\/p>\n
\u2022 Rational Expectations <\/p>\n
\u2022 Exchange Rates (Nominal and Real) <\/p>\n
\u2022 Purchasing Power Parity<\/p>\n","protected":false},"excerpt":{"rendered":"
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