Description

I want solutions to seven scenarios in Economics 101. The target company is IKEA…

Regarding scenarios 4, 5 and 6 respectively, I want to solve them twice: 1- One version for IKIA company 2- The other version is simulated numbers in a different waya. Times New Roman Fonts

b. Headings Bold size :14

c. Text size:12

d. Spacing between the lines must be 1.5

e. Spacing between the paragraphs must be 2.0

( ikea company)

f. Text justified

g. Insert question numbers

h. Insert page numbers

i. References

pre assigned a company/product which can be viewed from the project list in blackboard

1. write their project report in their own words. Any citations, quotations from any other sources must be

included in the references and must not be shown as their own work. This will be counted as plagiarism and

may cause cancellation of their project report.

Principles of Economics

A key skill in economics is the ability to use the concept of opportunity cost, supply and demand their

equilibrium and their elasticities to analyze specific markets. In this project you get a chance to demonstrate

your ability to analyze the effects of all the factors that cause a change in demand & supply as well as a change

in quantity demand and quantity supplied for a specific commodity. Answer all parts of each of the scenarios

below.

Page 1 of 7

This project is based on all modules in this course. An in-depth knowledge of the chapters is essential to answer

all the scenarios given.

Production possibility curve (PPC)

Scenario1:

a. If your company can make two goods, use a numerical table and list different combinations of two goods

your company can make.

b. Draw a PPC and show the different combinations on the graph. Show the attainable and unattainable

output levels on the graph.

c. Show the opportunity cost of one good in terms of another.

d. What happens to the opportunity cost? (Increases, decreases or remain constant)

LAW OF DEMAND

Scenario 2:

a. If the company decides to earn more profits and hence decide to increase the price of their product. Use a

numerical table of price and demand to explain.

b. What effect this increase in prices will have on consumers demand? Is it called a change in quantity demand

or change in demand? Why?

c. Draw and show this effect with the help of a demand curve.

Page 2 of 7

ELASTICITY OF DEMAND

Scenario 3:

a. If your company’s product has many substitutes in the market, what happens to the elasticity of your

product? If your company’s product has few substitutes in the market, what happens to the elasticity of

your product? If your company’s product has no substitutes in the market, what happens to the elasticity

of your product.

b. Use a numerical data of price and demand to show the price elasticity of your good.

c. Draw and show this effect of change in price on the demand for your company’s product with the help of a

demand curve.

LAW OF SUPPLY

Scenario 4:

a. Suppose your company produces a complementary good for its product? What happens to the supply of one

complementary good if the price of other complementary good falls.?

b. Use a numerical table of prices and supply to explain.

c. Is it called a change in supply or change in quantity supply?

DEMAND & SUPPLY EQUILIBIRUM

Scenario 5:

a. Use a numerical table and show the demand and supply equilibrium for your product.

b. During COVID-19 what happened to the demand for your product? Draw the shift in the demand curve and

show.

c. How will this change affect the equilibrium price and quantity of the good? Give reasons for your answers.

Page 3 of 7

Short run product and cost

Scenario 6:

a. Use a numerical table and show different worker and output levels (TP) and calculate MP & AP in the

short run.

b. Draw and show the behavior of TP, MP and AP curves.

c. Use a numerical table and show different output and cost (TC) in the short run and calculate TFC, TVC, AC,

AVC, AFC, MC.

d. Draw and show the behavior of TC, TFC, TVC in the short run in a separate graph. Draw AC, AFC, AVC, MC

in separate graph. Show the profit maximization point in the graph.

Scenario7:

a. Is your company operating in a perfect market? If yes/no give reasons.

b. Use a numerical data to show your firms output and revenue in a perfect market in the short run. Calculate

TR, MR, AR, total profits, TC, MC and ATC.

c. Draw TC and TR curves in one graph.

d. Draw MC, ATC, AVC and MR in one graph. Show profit maximization, shutdown point and losses in the

graph

Page 4 of 7

END OF THE PROJECT

PROJECT RUBRICS

Scenario

Question

Marks

PPC

a. 1

1.

b. 1

a. If your company can make two goods, use a numerical table and list different

c. 1

combinations of two goods your company can make.

d. 1

b. Draw a PPC and show the different combinations on the graph. Show the attainable

and unattainable output levels on the graph.

4M

c. Show the opportunity cost of one good in terms of another.

d. What happens to the opportunity cost? (Increases, decreases or remain constant)

2. 1

Law of demand

a. 1

a. If the company decides to earn more profits and hence decide to increase the price of

their product. Use a numerical table of price and demand to explain.

b. 1

c. 1

b. What effect this increase in prices will have on consumers demand? Is it called a

change in quantity demand or change in demand? Why?

3M

c. Draw and show this effect with the help of a demand curve.

3. 3

Elasticity of demand

a. 2

a. If your company’s product has many substitutes in the market, what happens to the

b. 2

elasticity of your product? If your company’s product has few substitutes in the

c. 1

market, what happens to the elasticity of your product? If your company’s product

has no substitutes in the market, what happens to the elasticity of your product.

b. Use a numerical data of price and demand to show the price elasticity of your good.

5M

c. Draw and show this effect of change in price on the demand for your company’s

product with the help of a demand curve.

Page 5 of 7

4. 4

Law of supply

a. 1

a. Suppose your company produces a complementary good for its product? What

happens to the supply of one complementary good if the price of other complementary

good falls.?

b. 1

c. 1

b. Use a numerical table of prices and supply to explain.

3M

c. Is it called a change in supply or change in quantity supply?

5. 5

Demand and supply equilibrium

a. 1

a. Use a numerical table and show the demand and supply equilibrium for your product.

b. 1

b. During COVID-19 what happened to the demand for your product? Draw the shift in

the demand curve and show.

c. 1

c. How will this change affect the equilibrium price and quantity of the good? Give

reasons for your answers.

6.

3M

Short run product and cost

a. 1

a. Use a numerical table and show different worker and output levels (TP) and calculate

b. 1

c. 1

MP & AP in the short run.

b. Draw and show the behavior of TP, MP and AP curves.

d. 1

c. Use a numerical table and show different output and cost (TC) in the short run and

e. 1

calculate TFC, TVC, AC, AVC, AFC, MC.

d. Draw and show the behavior of TC, TFC, TVC in the short run in a separate graph.

Draw AC, AFC, AVC, MC in separate graph. Show the profit maximization point in the

5M

graph.

7.

Prefect Market

a. 1

a. Is your company operating in a perfect market? If yes/no give reasons.

b. 2

b. Use a numerical data to show your firms output and revenue in a perfect market in

c. 1

d. 1

the short run. Calculate TR, MR, AR, total profits, TC, MC and ATC.

c. Draw TC and TR curves in one graph.

e. 1

d. Draw MC, ATC, AVC and MR in one graph. Show profit maximization, shutdown point

f. 1

Page 6 of 7

and losses in the graph.

7M

END OF RUBRIC

Page 7 of 7

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