work on Economic assignment

Project Introduction to Economics (BUS 509) Page 1 of 2 Dr. Fayq Al Akayleh PROJECT (10 % OF THE TOTAL GRADE) What we have learnt theoretically would be more interesting and useful if applied to a certain project. To do so, you pick up a business idea (business project) of your own and apply what we have learnt and discussed during the course "Introduction to Economics-Part 1: Microeconomics” based on the requirements and guidelines provided below: FIRST: Identify clearly your business (project) idea, objectives, and nature. (250-500 words). SECOND: Apply the opportunity cost concept (showing explicit and implicit cost) to five strategic decisions you may make in your project. Economic and accounting profit should be computed, whenever applicable. (Approximately 600 words). (Hints: you can refer to the example provided to you on the computation of economic profit and to the handout on the opportunity cost). [2.5/10] THIRD: To check for the knowledge gained from PPF as a tool to show the efficient allocation of resources, suppose your project produces only two products (two goods, two services, or one good and one service). Show the trade-off between the production of these two products under the condition of scarce resources, bearing in mind that the production process should be efficient. (Approximately, 250 words + PPF graph) (Hints: you can consider hypothetical quantities of each product. Further, refer to the PPF to support the trade-off between the products). [2.5 /10] FOURTH: As a manager of the project, discuss the effects of the consumers' behavior (choice) on the sales of your products if: 1. A value-added tax (sales tax) of 10 % is imposed by government on product X you produce. 2. You plan to increase the price of your product X by 15 %. (Approximately, 350 words) Hints for 1. : (i) You should, firstly, list two different quantities at two different prices (P1 and Q1 before sales tax; P2 and Q2 after sales tax) taking into consideration the Project Introduction to Economics (BUS 509) Page 2 of 2 Dr. Fayq Al Akayleh fact that demand law does hold (negative relationship between price (P) and quantity demanded (Q)). (ii) To explain the effect of consumer behavior on your sales, you need to calculate the Price Elasticity of Demand, and then comment on the sign and size of the elasticity, identifying whether the demand for your product is elastic or inelastic and why? Hints for 2. : (i) Consider the values of P1, P2, Q1, and Q2 as in part 1 of this problem (use the result of the first part of this problem). (ii) Consider the value of demand elasticity you calculated above (use the result of the first part of this problem). (iii)Calculate P3 after the 15% increase. (iv) Estimate Q3 after the price increase. (v) Compute Total Revenues before and after the price increase (TR2 and TR3). (vi) Based on the values of total revenues before and after the price increase, are you going to increase the price by 15 %? Why or why not? [5/10] Notes:- - The project should be sent as a softcopy via LMS - Due date: As specified on LMS. - Copy-past work will result in grade deduction or even zero mark in some cases. Best Wishes