Econ 3310 – microeconomics spring 2021 – david quigley g

1. ECON 3310 – Microeconomics
Spring 2021 – David Quigley
Group Report 1 – Due Monday, Feb. 22nd
Write a minimum of 4 pages, double-spaced, answering the
questions below. If you include
figures, those count towards the page minimum. Be as specific
as possible and always include
explanations that describe your reasoning.
Suppose you’re writing a report for the CEO of a theme park
entertainment company. The CEO
has the following questions she would like analyzed and
answered as well as possible.
1. The company is considering building and opening a new
theme park. The revenue from
the new theme park depends on the demand for theme park
entertainment. How does
the Law of Diminishing Marginal Utility relate to the Law of
Demand in shaping the
relationship between price and the quantity demanded for theme
park entertainment?
2. The CEO would like more information on the total costs of
building the new theme park.
A part of those total costs are opportunity costs. What are some
alternatives that might
go into the opportunity cost calculations and explain how you

2. might go about
calculating the opportunity cost (e.g., for those alternatives,
what information might
you need to figure out how those alternatives contribute to the
opportunity cost of the
project).
a. What might be some sources of sunk costs for this project and
explain how
timing affects the consideration of sunk costs.
3. Price Elasticity of Demand and Supply are useful for market
analysis. The CEO would like
to know whether you think the Price Elasticity of Demand for
theme park entertainment
is elastic or inelastic and why? Furthermore, she would also like
to know whether you
think the Price Elasticity of Supply for theme park
entertainment from competitors is
elastic or inelastic and why? What factors affect these price
elasticities?
4. Suppose a global pandemic makes people wary of
congregating in large groups.
How would this impact the market for theme park
entertainment? How would this
impact the profitability of the company’s new theme park? If
price of steel used in
constructing theme park attractions is going down at the same
time, how does this
impact the market and the profitability of the new theme park?

3. 5. Due to political pressure, the government imposes a binding
price ceiling on theme
parks. How does this impact the market for both consumers,
producers, and economic
efficiency, and what are the potential impacts on the company’s
new theme park?
ECON 3310 – MicroeconomicsGroup Report 1 – Due Monday,
Feb. 22nd