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Determinant in which you need to use data estimating future
market conditions.
b. (20 points) Price Elasticity of Demand facing you in your
scenario, including actual calculation of it using the midpoint
formula. If you can’t find data, then determine the Price
Elasticity from the Characteristics and make up numbers to
use. Be sure to identify this if you use this approach. This
will help you in deciding the slope of your Demand curve
below.
c. (10 points) Graph the Demand facing your situation. Note
that this requires information from the Supply Determinant
analysis before deciding how to draw the curve(s), as you
may need a separate MR curve.
2. Supply Determinants:
a. Each individual determinant analyzed for your situation, with
examples applicable to your situation (5 points each) and
research (3 points each) showing current Supply data or most
recent past data, except for the Expectations Determinant in
which you need to use data estimating future market
conditions.
i. (40 points) You need to be very specific in the Cost of
Production Determinant to identify Fixed, Variable, and
Marginal Cost in order to derive your Supply curve for
the graphing component. You will need to explain and
show how Profit Maximization or Loss Minimization
output and price are determined. You will need to do
the math using actual figures [cited] or your own
estimated figures [identified as such] and explain why
you expect Short Run Economic or Normal Profits,
Acceptable Loss or temporary Shut Down and how you
will know which it is.
ii. The Number of Sellers determinant must contain your
analysis of the kind of market structure in which your
firm or labor service will be sold.