Description Part1: Discussion Question: The Perfectly Competitive Lemonade Stand! Due Tuesday Imag ...
Description Part1: Discussion Question: The Perfectly Competitive Lemonade Stand! Due Tuesday Imagine you're running a lemonade stand on a hot summer day. There are many other lemonade stands on your street, all selling similar drinks. Using the concepts covered this week, discuss the following: Perfectly Competitive Characteristics: What are three key characteristics of a perfectly competitive market, and how do they apply to your lemonade stand situation? (Think about number of buyers/sellers, product homogeneity, and price control) Demand Curve and MR: Why is the demand curve faced by your lemonade stand perfectly elastic (horizontal)? How does this relate to the concept of marginal revenue (MR) for your stand? Long-Run Equilibrium: In the long run, what factors might cause lemonade stands to enter or exit the market? What conditions would indicate long-run equilibrium for the lemonade industry on your street? Industry Supply Curve: How can the individual cost curves of all the lemonade stands be combined to depict the industry supply curve? What does the shape of the long-run industry supply curve tell us about the production efficiency in this market? Economic Rent vs. Producer Surplus: Define economic rent. Are there any resources used in your lemonade stand that might generate economic rent? How does producer surplus differ from economic rent? How can you calculate the producer surplus for your lemonade stand at the long-run equilibrium price? Explanation: This question focuses on the key features of perfect competition and how they affect a firm's decisions: Perfectly Competitive Characteristics: A perfectly competitive market has many buyers and sellers, a standardized product, and individual firms cannot control the market price (price takers). These all apply to your lemonade stand situation. Demand Curve and MR: Because there are many sellers, a single stand has no influence on the overall price of lemonade. The stand can sell any quantity it wants at the prevailing market price, resulting in a perfectly elastic demand curve (acting as a horizontal line at the market price). Since price is fixed, marginal revenue (MR) is also equal to the market price for the stand. Long-Run Equilibrium: In the long run, firms can enter or exit the market. Equilibrium is reached when there are no excess profits to attract new entrants and existing firms are not making losses that would force them to exit. Industry Supply Curve: The industry supply curve is the summation of the individual supply curves of all lemonade stands. In the long run, efficient firms can adjust their production scale, leading to a relatively flat long-run industry supply curve, reflecting efficient production across the market. Economic Rent vs. Producer Surplus: Economic rent is the payment for a resource above its minimum opportunity cost. There might be economic rent associated with a prime location for your stand. Producer surplus is the difference between the price a firm receives and its minimum acceptable price (average total cost at equilibrium). You can calculate your producer surplus by finding the area above the long-run ATC curve and below the market price line. Discussion Question Requirements Initial responses are due by Tuesday, and two peer responses are due by Friday. The initial response should be a minimum of 200 words, with at least two peer-reviewed references. In-text citations are required. Peer responses should be a minimum of 150 words, with at least one peer-reviewed reference. Rubric Grading Initial response Response #1 Peer Response #2 APA References, Intext-citations, and Writing Mechanics Part 2: Assignment Title: Lemons, Laws, and Lemonade: Understanding the Business Environment Due Thursday Scenario: You're ready to open your lemonade stand on a bustling street corner. However, the lemonade business isn't as simple as it seems – you face regulations, potential competitors, and the uncertainties of running a small business. Assignment Task: Write a short report (approximately 1,000 words) to address the business environment around a lemonade stand. Consider the following areas of focus and research: Local Regulations: Research the permits, health code requirements, and other local ordinances a lemonade stand must abide by (zoning, safety, business licenses, etc.). Do these regulations act as barriers to entry? Discuss how they might protect the community and/or limit potential competitors. The Competitive Landscape: Analyze how the perfectly competitive model applies to the lemonade stand market. Consider ease of entry/exit, standardized product, and lack of price control. Conduct a brief competitor analysis (even if just informal observations of other lemonade stands or substitute sellers). Are there ways for your stand to slightly differentiate itself while maintaining the characteristics of a competitive market? External Influences: Identify external factors that can heavily influence the success of a lemonade stand that are outside of your direct control (weather, special events nearby, foot traffic, etc.). Research resources for small businesses in your community. Identify any potential support or training that might help you manage the uncertainties of your business venture. Additional Prompts Include a works cited section in an appropriate format (MLA, APA, etc.) to list your research sources. Consider incorporating images, if suitable, such as an example of a required business permit application for your location. Objectives: This assignment aims to develop the following skills: Researching rules and regulations affecting small businesses. Understanding the competitive dynamics of a specific market. Recognizing external factors that influence business success. Identifying resources and support for small businesses and entrepreneurs. Grading: Essay is at least 1,000 words All four sections are discussed. Content is researched and relevant to the topic. Content is free from mechanical written errors. There are at least three references used in the essay that support the topic. User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
