Microeconomics Writing Project
The goal of this project is to learn about a company and the industry in which it
operates, and then to apply the concepts of this course to a company that you
know something about.
In Part I (this part), you demonstrate your knowledge of how the supply and
demand model works on your company.
In Part II (later this semester), you demonstrate your knowledge of the various market structures.
Part I
Pick a company that produces a good or service. Choose a company that:
– Interests you. Consider companies for which you might want to work or
where a family or friend works. This can be a local, national, or
international company.
– Is not too diversified. For example, Proctor and Gamble would be a bad
choice because they are really several kinds of companies all operating
under one name, since they produce soaps, detergents, skin care, paper
products, toothpaste, etc. To determine if your company is too diversified
ask yourself, “In what industry does my company compete?” If you can
think of more than one industry in which your company competes, then it is
too diversified.
– Has been in existence for at least 10 years.
1. (Page 1) Write a 200 word introduction of your company and what it
produces. (20 points)
2. (Pages 2 – 5) Describe at least four factors that could affect the demand for
that good or service. Show graphically the impact of each factor on the
market for the good or service. (10 points each) These do not need to be
things that have happened or are happening. These are things you can imagine
that would cause a shift of the demand curve. Make sure you describe in
words the event that would shift demand, and show the shift in a complete and
correctly-labeled graph.
3. (Pages 6 – 9) Describe at least four factors that could affect the supply of that
good or service. Show graphically the impact of each factor on the market for
the good or service. (10 points each) Again, you are free to imagine
something that would cause the shift of supply. Make sure you describe in
words the event that would shift supply, and show the shift in a complete and
correctly-labeled graph.
For this part of the project you will
– DRAW eight graphs, four with demand shifts and four with supply shifts.
Start each graph showing the market in equilibrium with a drawing like this:
– Write eight paragraphs (1/2 page each) explaining each shift and the impact
on the equilibrium price and quantity of the good or service. Be specific
– why was more/less demanded? Why was more/less supplied?
Total length = 9 pages:
1 page for 200 word introduction
8 x 1 page with a graph showing the impact of the change in supply or demand
and explanation for each shift.
Summary: The first part of your writing assignment should be:
9 pages long.
Page 1 is the brief descriiption and history of the company.
Pages 2 through 5 – each page describes ONE event that would cause a shift
of demand for your company’s product.
Pages 6 through 9 – each page describes ONE event that would cause a shift
of the supply of your company’s product.
Make sure all your graphs are correct and complete. This means everything
is labelled correctly!
Make sure you credit your sources correctly! See the sample if you are
unsure.
Be clear in your writing (and in your own head!) whether you are describing
something that affects YOUR company ONLY, or affects ALL companies
producing the same product. (For instance, if your company is Starbuck’s –
then a report linking coffee-drinking to cancer causes a shift in demand for
ALL sellers of coffee. A consumer boycott of Starbucks over their
employment practices affects demand for Starbucks coffee, but not the
market demand for coffee.)
How will it be graded?
1. Whether your introduction page describing the company and its product is
clear, complete, and grammatically correct.
2. Whether you have followed the directions correctly. (Did you make your
work 9 pages, with one page introduction and 8 pages of shifts.)
3. For EACH of your shifts:
a. Whether your descriiption of the event causing the shift is clear.
b. Whether the event you describe would actually cause the shift you
show on your graph.
c. Whether your graph is clear, correct, and COMPLETELY LABELED.
This means each axis must have a label, and each line must have a
label.
d. Whether your text describes clearly WHAT HAPPENS TO
EQUILIBRIUM PRICE and WHAT HAPPENS TO EQUILIBRIUM
QUANTITY?
4. FREE ADVICE (how to avoid the most common student errors):
a. For a demand shift, this should be a change in the buyers’ behavior –
not the result of something the firm has done. What makes the buyers
different? Are there more of them? Do they have more income? Do
they have other options they didn’t have before? Have they changed
what they want? These are things that make demand shift.
b. For a supply shift, this should be a change in the seller’s COST – not
anything that doesn’t relate directly to cost. Are they paying more for
supplies or labor? Do they have new machinery? Have they invented a
new production process? Are their workers on strike? Is their factory
already booked up producing some different product? These are things
that make supply shift.
c. Be careful NOT to change the product! Don’t say, “Hershey’s makes
their candy bars 50% bigger, so buyers will buy more of them.” That’s
not a demand shift – you have changed the product.
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