Please prepare an 8-to-15-page report concerning microeconomic issues faced by a firm of your choice. You will apply microeconomic theory and make your own recommendations in this report. • Please discuss the firm – What do they do? Please offer some key statistics on the firm such as sales, market share and some product information. In general, are they a successful firm or are they in trouble. Please only concentrate on one product or service if they sell many products and services.
• Please say something about their industry – Are they operating in a competitive market, an oligopoly, cartel, monopolistic competition or a monopoly. Please comment on who their largest competitors are. What is the current situation in the industry – is the industry facing special problems such as new government regulations, international competition, etc…
• Please comment on the firm’s demand curve – Do your best to draw the demand curve and try to calculate the firm’s elasticity. Determine if they have an elastic or inelastic demand curve. You will probably need to guess at this, but use your best judgment. It’s O. K. to use numbers that are your best estimates!
• Please comment on the firm’s pricing strategy – Are they following a successful strategy or can you think of better ways they might be able to increase sales and market share by changing their prices or adding something of value?
• Please make a fast overview of the firm’s major cost categories such as labor, marketing expense, cost of raw materials, etc… Can the firm do anything to minimize their costs further or are they already doing a great job? Optional: If you really want to impress your instructor, you can try to draw out the AFC, AVC, ATC, MC and supply curves.
• Please comment on their profit maximization strategy – Are they already successful or can they do better?
• Please comment on your other recommendations that would you make to senior management to ensure their continued business success?
• Please comment about their stock if they are a public company – Basically do you think the firm is a good investment? If they are a private firm, then do you feel the firm is a good investment for private investors?
• Other: You are free to add anything else.

By the end of this section, you will be able to:

Describe microeconomics

Describe macroeconomics

Contrast monetary policy and fiscal policy

To understand why both microeconomic and macroeconomic perspectives are useful, consider the problem of studying a biological ecosystem like a lake. One person who sets out to study the lake might focus on specific topics: certain kinds of algae or plant life; the characteristics of particular fish or snails; or the trees surrounding the lake. Another person might take an overall view and instead consider the entire ecosystem of the lake from top to bottom; what eats what, how the system stays in a rough balance, and what environmental stresses affect this balance. Both approaches are useful, and both examine the same lake, but the viewpoints are different. In a similar way, both microeconomics and macroeconomics study the same economy, but each has a different viewpoint.

Whether you are looking at lakes or economics, the micro and the macro insights should blend with each other. In studying a lake, the micro insights about particular plants and animals help to understand the overall food chain, while the macro insights about the overall food chain help to explain the environment in which individual plants and animals live.

MICROECONOMICS

What determines how households and individuals spend their budgets? What combination of goods and services will best fit their needs and wants, given the budget they have to spend? How do people decide whether to work, and if so, whether to work full time or part time? How do people decide how much to save for the future, or whether they should borrow to spend beyond their current means?

MACROECONOMICS

KEY CONCEPTS AND SUMMARY

Self-Check Questions

What would be another example of a “system” in the real world that could serve as a metaphor for micro and macroeconomics?

Review Questions

What is the difference between microeconomics and macroeconomics?

What are examples of individual economic agents?

What are the three main goals of macroeconomics?

Critical Thinking Questions

A balanced federal budget and a balance of trade are considered secondary goals of macroeconomics, while growth in the standard of living (for example) is considered a primary goal. Why do you think that is so?

Macroeconomics is an aggregate of what happens at the microeconomic level. Would it be possible for what happens at the macro level to differ from how economic agents would react to some stimulus at the micro level? Hint: Think about the behavior of crowds

Explanation:

the first one is d and the second a