1. Length: 1700 – 2200 words – typed – double spaced.

2. Choose a business with a maximum of $50,000 outlay (for one fiscal year) on your part.

3. Develop a START-UP manual for the above business applying MICROECONOMIC concepts and theories.

4. Follow the Outline below:

I. Industry or Business Description

A) Introductory description of your business: describe the product/service being supplied by your business, identify and describe your customers, identify and describe your competitors, explain your source of financing. Provide some statistical characteristics (if applicable) – in no particular order.

B) Type of Business Organization (sole proprietorship if you are working alone or partnership if you are working with a partner in class): list the advantages & disadvantages of the type of business organization chosen; explain your choice of business organization.

C) Factors Requirement: list ALL the inputs that you will require for the production of your product. Classify them as either fixed costs (inputs) or variable costs (inputs).

D) Classify the market structure that your business belongs in. Justify your classification: ease of entry, government regulations, capital requirements, number of firms (competitors), homogeneity or lack of homogeneity of the products supplied in the market, etc.

(See Next Page)
II. Economic Applications

1. Market Analysis:

Use Supply and Demand determinants to explain current trends and predict future trends of the market. Are these trends positive or negative for your business? What can you say about the elasticity in this market and how it relates to your business?

2. Differentiation:

Differentiation creates market power. How do you intend to differentiate your product from the competition (ex: additional services, location, management, marketing, etc.)

3. Pricing Strategy:

Explain your pricing strategy in the context of elasticity, costs of production, and competition (or market structure).

4. Projections of Return (for one year) – Profit and Loss Statement:

Tabulate the following variables for each month of the year: Profits (expected), Total Revenue (expected), Total Costs (projected).

Tabulate the following variables for the year: Profits (total), Total Revenue (total), Total Costs (total), Average Cost, Profit per unit.

Explain the values reported. Explain any seasonal variations in the variables, if applicable.

 

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