The allure of the marketplace: microeconomics simulation

As a final project for Oliver Khamky’s Microeconomics class first semester, students formed companies by pairing up, selecting a name, and designing their own logos. The eight companies competed with each other for thirteen rounds in six different industries: Rubik’s Cubes, Frisbees, Magazines, Paper Airplanes, Inspirational Posters, and Frozen Yogurt.

Using the microeconomic analysis skills they learned, students decided which markets their company should enter. They competed with the seven other student-run companies on the basis of price and output in each round. “Several rounds introduced breaking world news,” Oliver said. “Students were forced, on the fly, to determine which markets would be affected and adjust their output and pricing accordingly. A number of companies attempted to collude on price but found the temptation of undercutting too alluring.”

The brains behind Breamer Partners:  Margot Creamer and Danielle Bibeault.

The brains behind Breamer Partners, LLC: Margot C. and Danielle B.

Margot C. ’14 and Danielle B. ’15 of Breamer Partners, LLC earned the most money. They shared: “Diversification was key in our success. Early on in the simulation, we entered all industries where we could make a profit, and this gave us enormous combined profits. This allowed us to make a substantial amount of money without taking too many risks. We priced conservatively to ensure that our products were all sold, while still pricing high enough that we maximized profit. We also worked alongside other teams to ensure that our prices wouldn’t be undercut, although along the way we accidentally undercut some other teams, as well!”

Nate S. ’15 and Olivia M. ’15 of Team Too were the runners-up. “They relentlessly undercut the others in the Inspirational Posters industry until they had a monopoly,” Oliver said.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s