required book: Mankiw, G. (2018). Brief principles of macroeconomics. (8th ed.). Cengage. ISBN: 9781337802154   ResourcesRead/review the following resources for this activity:Textbook: Chapter 5 V

required book:

 Mankiw, G. (2018). Brief principles of macroeconomics. (8th ed.). Cengage. ISBN: 9781337802154   

ResourcesRead/review the following resources for this activity:

• Textbook: Chapter 5
• Videos: Chapter 5 (in Weekly Resources) , I will send these privately.
• No outside sources are required 

Introduction

In this paper, you will apply what you have learned in Chapter 5 to the firm or business you selected in order to see how the concepts can be applied to a business situation. 

Keep in mind that throughout this course, papers are intended to bring real-world situations to the course material that we are covering each week. Part of your grade will depend on the connections you make between your chosen firm (which could include the economic environment of your chosen firm, the markets in which your chosen firm interacts with outside actors, the decisions your chosen firm makes, etc., depending on the particular question), the material from the chapters we covered in the week, and, when applicable, your own experience. 

Activity Instructions

In this paper, explore and explain how your chosen business could use the idea of elasticity to make more informed decisions.  For instance, in Chapter 4 we learned that if the price of a good drops, the quantity demanded increases.  However, a business needs more information than that to make a good decision—by how much the quantity demanded increases is very important to know; the price elasticity of demand can be used to estimate the change in quantity demanded. 

Several questions to consider: does your firm sell related products for which a cross-price elasticity of demand would be useful to know?  Do competitors change the prices of their goods, and how could our business use elasticities to determine a best response to such a price change?  Also remember that we could put other economic variables in the elasticity equations—we could discuss the advertising elasticity of demand, for instance, which would estimate by what percentage the quantity demanded would change for a certain percentage change in the amount of advertising (and then we could use the idea of comparing marginal benefit with marginal cost to see whether we should increase advertising). 

Also—while I do not expect you to have specific values for elasticities as an outsider to the firm (if you were working for the firm, you would—or could—have those values), what do you think the elasticities you included in your paper would be—elastic, inelastic, strongly elastic, or strongly inelastic?  Why? 

Writing Requirements (APA format)

• 1.5-2 pages (approx. 300 words per page), not including title page or references page
• 1-inch margins
• Double spaced
• 12-point Times New Roman font
• Title page with topic and name of student 

Grading and Assessment

This activity will be graded based on academic content, integration of resources, and college-level writing and grammar. Refer to the Written Analysis Grading Rubric (in Course Documents) 

Course Learning Outcome(s): 1, 2, 3, 4, 5, 61.   Apply the Ten Principles of Economics (basic economic axioms) to real-world situations.2.   Predict market outcomes using simple Microeconomic models.3.   Illustrate how markets serve to allocate goods and services.4.   Analyze the welfare effects of differing market allocations.5.   Apply the simple Microeconomic models to real-world situations and determine how the assumptions or predictions of a model may need to be modified to apply to the real-world situations.6.   Analyze the implications of Government interventions on market outcomes and welfare.

 TopicsElasticity, Inelastic and Elastic Demand (and Supply), Unit Elasticity 

Coverage/Reading

• Cover Chapter 5.1a-d, g, 5.2, 5.3.

Chapter Learning Outcomes

Chapter 5After covering this chapter, students will be able to:

1. Calculate various elasticities using data.
2. Categorize elasticities into one of five different ranges.
3. Predict the change in one economic variable given a change in another economic variable using the relevant elasticity.
4. Apply the principles of elasticity to business decisions. 

For the papers, as I mentioned, please pick a firm that you have a lot of knowledge about without needing to do additional research.  --they are APPLICATION papers and NOT RESEARCH papers.  I want you to apply the content from the course/chapter to the particular questions asked and firms chosen.  I would even say it's fine to make assumptions if you need, even if your assumption turns out to not be true.  Again, it is the application of the concepts that I am examining. Also, for the firm selection, there are a few things I would recommend and ask.  First, please note the firms I said not to pick--it's not an exhaustive list but please keep the general concept in mind; try to avoid the huge, 'common' firms.  Don't worry though, if you pick one that I might put in that list, I'd just ask you to pick a different one for the second paper and on.  But I haven't really had to do that for people who keep the ideas in mind (another way of saying it would be pick a firm that you could see being 'unique' in the class--something nobody else has chosen.  Obviously without these guidelines and above, Apple would be something likely chosen by several students, for example).Some suggestions: don't worry about the 'international' connection mentioned in the first e-mail/announcement. That's more for the Macro class.  Also, I would strongly suggest picking a firm that makes its own product or provides its own service.  Picking a retailer (Kroger, Walmart, Dick's Sporting Goods) often provides difficulties.  Kroger's product, for instance, is NOT what you purchase at Kroger (well, excepting store brands..).  Also, I would strongly suggest picking a firm you know a lot about already, from your general interests (or perhaps working for the firm).

Also, I would ask that when you make your posts that you make the subject line reflect the content.