MICROECONOMICS GROUP PROJECT
The purpose of this project is for you to try out microeconomic tools on the "real world."
This project challenges you and your group to apply economic concepts to a story from
the business press or the situation facing a business. Together with the members of your
group you will:
1. Select a topic/question that interests you from the list that accompanies this
assignment. Pick a topic that interests your group -- then notify me. Do additional
research to better inform you about the issue.
2. If you're presenting an analysis of ticket scalping your question might be: "What laws
should govern the resale of concert tickets?" Or perhaps, "Does scalping increase the
efficiency of the market for concert tickets?"
3. Analyze the news story in microeconomic terms; that is, present the story in terms of
supply-and-demand, price discrimination, a strategic interaction--or some other
economic tool we've covered in class. Then ask the following questions: Is the
outcome "efficient"? If not, why not? What policy might improve the situation? Is
government intervention necessary? At what level of government should a new policy
be administered -- state, local, national?
For instance, if you decided to analyze ticket scalping you'd want to apply supply-anddemand analysis to the New York Times story about scalping. Explain how the market
would work without price controls, show how price controls create a role for scalpers,
and use "social profit" as a criterion for evaluating alternative institutions. You'd want to
address questions like: "Should there be a law against scalping?" "Should we even have
price controls in the first place?" "When are price controls effective and when are they
likely to be counterproductive?"
4. Present your results. Each group will make a 5-minute presentation of its analysis and
submit a clear and concise summary of its presentation (maximum length 2 pages).
5. Be prepared to answer questions from the class about your analysis. (The Q&A
period does NOT count as part of your 5-minute presentation.)
Some Frequently Asked Questions:
How do we get a topic/question you haven’t included?
Just ask!
You can decide to apply microeconomic analysis to the situation facing a local business
(or one of your previous or prospective employers). Analyze the business's operations in
microeconomic terms; that is, describe the firm's technology, collect information about
the firm's costs, determine the environment in which the firm competes--competitive,
oligopolistic, monopolistic -- and explain how these factors influence the firm's price and
output decisions. Recommend changes in the firm's operations that might increase profits.
State a question about this business and use microeconomics to explain its situation and
make recommendations.
When is this assignment due?
You will present your projects
What's the written report supposed to be like?
The report gives you a chance to show off your written communication skills. I'm looking
for succinct descriptions of a situation (Does this group recognize the most important
economic aspects of this story? Are they rambling?), clear presentations of an argument
(Does this group understand the economic theory they're applying? Am I being snowed?),
and creativity in the application of tools used (Is this just a repeat of something we did in
class? Or did this group come up with an appropriate application of those game theory
tools, for instance, that really surprises me and helps me understand the news story they
chose?
Do we have to use math and graphs?
Only if it serves your argument. (If you can make you're argument without math or
graphs, however, you're probably not challenging yourselves enough.) Use mathematics,
graphs, charts, analogies, allegories, and artwork, whatever helps you explain and defend
your analysis. Everything in the report should have a purpose. The reports that get the
highest scores in my class are completely trimmed of "fat" and organized according to
some readily apparent scheme. Graphs should be clear and devoid of "decoration."
"Creativity" does not mean "cute."
How are the summaries graded?
Each summary will be assigned a grade on a scale of one to ten in each of three
categories: clarity, organization, and accuracy. WRITE YOUR REPORT TO IMPRESS
A TIME-CONSTRAINED READER.
The highest marks will go to those groups who do the best job of applying the tools of
microeconomics.
You should be able to answer questions about your firm or news story and about your
analysis.
Oral presentations
Each presentation should be an extremely clear and well-organized mini-lecture. It will
be worth twenty points to the overall mark. The more economic intuition you can present
in 5 minutes, the better. The highest marks will go to the groups that find ways of
"conveying understanding" to their classmates. A poor presentation gets so sidetracked
with math and graphs that the audience loses the economic intuition.
Tips for effective presentation:
1. Make sure that what you’re talking about is important to you. Your interest in
your subject inspires and motivates you to create a presentation of high quality.
2. Be your own critic. You have a sense of what “works” and what doesn’t. Turn
on yourself the critical faculties you use on your teachers and peers. Don’t give a
presentation that you wouldn’t want to watch yourself – that you’re not proud of.
Your careful preparation shows respect for your audience.
3. Teach yourself presentation skills by noticing what works in other people’s
presentations. Look at ads on TV and in magazines and ask, “What makes this
interesting and effective? Why do I respond to it? How could it be improved?”
Pay attention to examples of effective communication around you and collect
lessons and tools from daily experience.
Some Sample Presentation Topic Questions
1. What legal restrictions should govern the resale of concert tickets?
2. How should tobacco be taxed or regulated?
3. How can a city solve its traffic problem?
4. Will markets in pollution rights lead to a cleaner environment?
5. Should the government control prescription drug prices?
6. How will deregulation affect the electrical utility industry?
7. Should prisons (the interstate highway system, etc.) be privatized?
8. How are credit card providers (hotels, airlines, etc.) profiting from price
discrimination? Is price discrimination ethical?
9. Can the world fisheries be saved?
10. How is technological progress reshaping industry?
11. Should cities be providing curbside recycling?
12. Is Microsoft a dangerous monopoly? What should be done?
13. Who would benefit if New York City raised the maximum allowable fares that cab
drivers can charge? Who would be hurt?
14. Who benefits from the increase in the minimum wage? Who is hurt?
15. What are the costs and benefits of the mortgage interest tax deduction? What
alternatives would be better?
16. What kinds of restrictions should govern state and municipal tax concessions
designed to attract businesses?
17. Which industries in the U.S. (and in particular, which workers and capital owners)
would benefit from freer trade with ----- (pick a country or region)?
18. How do airline companies set the reward levels for its frequent flyer program? Could
they improve it?
Grading Rubric
Paper
Scale is on a one to ten
Clarity
2
4
6
8
10
Organization
2
4
6
8
10
Accuracy
2
4
6
8
10
Presentation
Conveyed Information
2
4
6
8
10
Interesting
and Well Organized
2
4
6
8
10