Description
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Explanation & Answer
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Outline
1. Comparative Advantage
2. Competitive Markets and Externalities
3. Production, Entry, and Exit
4. Market Structures (including the Price Discrimination and Cournot simulations)
5. Conclusions
6. References
ECO 201 Project Template
Memo
To: My Business Partner
From: [Insert your
name]
Date: [Insert date]
Re: Microeconomics Simulations
Introduction
1.
2.
3.
4.
5.
6.
This memorandum report identifies and explains key microeconomic principles using a set of simulation games. The outcome of these games
illustrate how microeconomic principles can be applied within real-life situations to help us make better business decisions. This report is a
summary of the simulations I played and their results, which include the key takeaways and their significance, for your review and reference. It is
divided into the following sections:
Comparative Advantage
Competitive Markets and Externalities
Production, Entry, and Exit
Market Structures (including the Price Discrimination and Cournot simulations)
Conclusions
References
Comparative Advantage
Figure 1.1
This simulation explains how people must make business choices by weighing opportunity costs and debating all possible outcomes.
You'll want to compare how many fries you can create to how many burgers you can cook, and vise - versa. If you can create two burgers for
every fry, you are sacrificing two burgers every time you make a fry. You must experiment with various combinations to ascertain the most
profitable merchandise. The productivity-possibility frontier illustrates the possibility curve for how many fries you can produce if you produce
X number of burgers and vice versa. We'll need to experiment with various meal combinations in order to create this graph. How much fries
will there be if we cook no burgers? And work your way up to ordering solely burgers without any fries. This manner, we may examine all
possible combinations and choose which one works best for us.
In business, the concept of comparative advantage has a considerable impact. Comparative advantage refers to the fact that one
organization has an advantage over another in producing a certain product. In order to have a competitive advantage, we must be better at
creating burgers than our neighboring firm. When it comes to preparing fries, the firm next door has a comparative edge over us. In this
scenario, we want to be the ones to start things off. It's easier for us to construct as many combinations as possible by exchanging burgers for
fries. Using the simulation, you can see that I was able to make 85 total combinations, an increase from the previous 80 with no trade. If we
keep looking for the best possible deal, I'm sure we'll come up with many more combinations. A company's productivity-possibility frontier
will shift as a result of international trade. The PPF line would be straight if all trade-offs were equal. The initial PPF curve would be altered if
trading was different.
Competitive Markets and Externalities
Figure 2.1
Figure 2.2
The term "policy...