Economic Issues and Principles

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SimEcon

• Economic Issues and Principles

Dismal Science Software
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Goals of SimEcon

• Develop an interactive instructional tool
• Add value to economic education
• Improve student learning
• Attract students to economics
• Increase instructional access

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SimEcon Modules
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SimEcon Design and Operation

• Operates with a graphical interface
• Runs on Microsoft Windows
• Uses object-based programming features
• Contains initial conditions for each module
• Provides tabular and/or graphical results

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SimEcon Uses

• Individual student assignments
• Group lab or activity sessions
• Distance-learning modules
• On-line course assignments

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Markets Module
Shows how markets work. You change supply or
demand factors and observe the effects on market
equilibrium. You may also regulate the market
with price or quantity controls and review the
results.
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Markets Module

• Initial Conditions
• Demand
• Income
• Butter Price
• Corn Price
• Supply
• Rainfall
• of Farms
• Seed Cost

• Initial Equilibrium
• Price
• Quantity

• Regulate Market
• Control Price
• Price Ceiling
• Price Floor
• Control Production

• Disturb Market
• Demand
• Supply

• Results
• New Equilibrium Price and Quantity

• Results
• With Regulation
• Without Regulation

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Competition Module
Shows how a competitive firm determines its price
and output. You select the quantity of output
that maximizes short run profits as price and
costs change and see the results.
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Competition Module

• Short Run Costs
• Marginal Cost
• Average Cost

• Firm Results
• Price
• Costs
• Profit Margin
• Total Profit
• Equity

• Set Firm Output
• Current Market Price Provided
• Set Output Level

• Expert Analysis
• Evaluation of Output Decision

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Monopoly Module
Shows how a monopolist maximizes long run profits
as its costs and output change. You may also
regulate it by breaking up the monopoly and/or
applying marginal or average cost pricing
policies.
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Monopoly Module

• Initial Conditions
• Total Output
• Total Fixed Cost
• Total Revenue
• Total Cost
• Total Profit
• Total Equity
• Price
• Marginal Revenue
• Marginal Cost
• Average Total Cost

• Choice
• Variables
• Total Fixed Cost
• Output

• Regulate Monopoly
• Number of Firms
• Price

• Results of Regulation for
• Pure Monopoly Pricing
• Average Cost Pricing
• Marginal Cost Pricing
• Total Cost
• Average Cost
• Price
• Industry Output
• Profit

• Output Results
• New Equilibrium
• Price and Quantity

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Labor Module
Shows the impacts of labor market disturbances on
labor market equilibrium. You can see how
discrimination affects the employment and wages
of workers who were discriminated against and
those who were not. You can also try to reduce
the burden of discrimination on its victims.
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Labor Module

• Initial Conditions
• Demand
• Price of Bread
• Oven Cost
• Price of Flour
• Supply
• Population
• Participation Rate
• Cooks Wage Rate

• Initial Equilibrium
• Price
• Quantity

• Discriminate
• Control discrimination among Pildians
• Big Pildians
• Little Pildians

• Disturb Market
• Demand
• Supply

• Results
• New Equilibrium Price and
  Quantity

• Results
• With Discrimination
• Without Discrimination

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UtilityMax Module
Shows how a consumer maximizes utility with a
limited income. You choose quantities of two
goods depending on the consumers preferences,
prices, and income, and see the results. Income
and substitution effects are reported for price
and income changes.
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UtilityMax Module

• Initial Conditions
• Price of Beer
• Price of CDs
• Consumers Income

• Set Preferences
• Preference A
• Preference B

• Select Quantities
• Beer
• CDs

• Change Budget
• Price of Beer
• Price of CDs
• Consumers Income

• Consumer Results
• Total Utility
• Marginal Rate of Substitution
• Maximum Possible Utility

• New Consumer Results
• New Maximum Utility
• Income and Substitution Effects

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CostMin Module
Shows how a firm arranges its production process
so as to minimize the total costs of its product.
You choose the number of variable inputs and
the technology the firm adopts and view the
results of the firms output and production
costs.
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CostMin Module

• Select Inputs
• Select Number of Variable Inputs
• Select Technology

• Graphs
• Isocost / Isoquant
• Long Run Average Cost / Marginal Cost

• Production Results
• Output
• Total Cost
• Average Cost
• Marginal Costs
• Marginal Products
• MRS

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GasStations Module
Shows how a monopolistically-competitive firm
operates. You manage the firm so as to maximize
short-run profits by selecting a location and
price of gasoline and see the results over
several months of service.
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GasStations Module

• Initial Conditions
• Rent at Location 1
• Rent at Location 2
• Current Price of Gas

• Set Preferences
• Location 1 or 2

Select Gas Price

• Change Location

• Operation Results
• Gallons Sold
• Total Revenue
• Total Cost
• Station Rent Increase

• Executive Summary
• Months in Operation
• Total Profits
• Total Gallons Sold
• Average /Gallon

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Externalities Module
Shows the economic results of two different
types of externalities and appropriate policies
to internalize these externalities. In
Positive Externalities, you subsidize vaccine
production and development costs in order to
maximize total net benefits to society from
providing flu shots. You may view the results
for a competitive or monopolistic vaccine
market. In Negative Externalities, you use
pollution permits or taxes to control pollution
in the steel industry in order to maximize total
net benefits to society.
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Positive Externalities Module

• Initial Conditions
• Government Spending
• Social Net Benefits Lost
• of Flu Shots
• Price of a Flu Shot
• MSB of a Flu Shot
• MPC of a Flu Shot

• Choices
• Development Cost
• Market Structure
• Subsidy Type

• Results of Market Choices
• Vaccine Price
• Marginal Private Cost
• Vaccinated
• MSB
• MSC
• Total Profit
• Total Social Net Benefits

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Negative Externalities Module

• Initial Conditions
• Production
• Pollutants
• Price of Steel
• Employment
• Average Wage
• Current Regulation
• MPC
• MSC
• MEC
• Total External Cost

• Results of Pollution Control
• Steel Output
• Pollutants
• Price of Steel
• Employment
• Average Wage
• MPC
• MSC
• MEC

• Pollution Control Choices
• Issue Permits
• Set a Tax

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Macro1 Module
Shows annual and long run simple multiplier
effects of a fiscal or monetary policy. You get
to cure depressions or inflations by manipulating
taxes, government spending, and the interest
rate, and see the results.
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Macro1 Module

• Initial Conditions
• Consumption
• Investment
• Government
• Real GDP
• Unemployment Rate
• Inflation Rate
• Nominal Interest Rate
• Taxes

• State of the Macroeconomy
• Inflation
• Recession

• Annual and
• Long Run Results
• Consumption
• Investment
• Real GDP
• Unemployment Rate
• Inflation Rate

• Policy Decisions
• Government Spending
• Taxes
• Interest Rate

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Drug Wars Module
Shows the benefits and costs associated with
allocating a limited budget. You have 100
billion to minimize the damage done by drug use.
You can spend the budget on therapy, law
enforcement, and/or education and see the
results.
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Drug Wars Module

• Initial Conditions
• Property Damage
• Lives Lost

• Total Results
• Damages
• Damage Prevented
• (Approval Rating)

• Allocate Drug Wars Budget
• Law Enforcement
• Education
• Therapy

• Set Value of Life
• Drug Users
• Non-Users

• Marginal Results
• Damage prevented by budget category

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Banking Module
Shows how the FED uses the required reserve
ratio, the discount rate, and open market
operations to control the money supply. You can
then view the effects of your policy choices on
the balance sheets and profit and loss statements
of high risk and low risk banks.
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Banking Module

• Initial
• Conditions
• Discount Rate
• Required Reserve Rate
• Money Supply
• Interest Rate
• Demand Deposits

• Monetary Policy Tools
• Required Reserve Ratio
• Discount Rate
• Open Market Operations

• Policy Results
• Money Supply
• Bank Deposits
• Interest Rate
• Financial Impact to High and Low Risk Bank
• Balance Sheet
• Profit and Loss

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E-Growth Module
Shows how one or more factors affect a nations
economic growth. You set social and/or economic
variables, and review the results generation-by
generation for six generations.
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E-Growth Module

• Initial
• Conditions
• Population
• Real GDP
• Consumption
• Investment
• Public Goods

• Choice
• Variables
• Social
• Age of Marriage
• of Children
• RD
• Economic
• Investment
• Public Goods

• Results
• by Generation
• Population
• Population Growth
• Real GDP
• Real per Capita GDP
• Consumption
• Real per Capita Consumption
• Real Value of Capital Stock

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Macro2 Module
Shows yearly, simple multiplier results from
fiscal and/or monetary policies. You get to cure
recessions and inflations by manipulating taxes,
government spending and the money supply, and see
the yearly results.
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Macro2 Module

• Initial Conditions
• Consumption
• Investment
• Government
• Net Exports
• Real GDP
• Unemployment Rate
• Inflation Rate
• New Price
• Nominal Interest Rate
• Real Interest Rate

• State of the Macroeconomy
• Inflation
• Recession

• Yearly Results
• Consumption
• Investment
• Net Exports
• Real GDP
• Unemployment Rate
• Inflation Rate
• New Price
• Nominal Interest Rate
• Real Interest Rate
• Performance over Time
• Aggregate Supply
• Aggregate Demand

• Policy Decisions
• Government Spending
• Taxes
• Money Supply

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Macro3 Module
Shows how an open-macroeconomy works. You set
fiscal and monetary policies to cure recessions
or inflations and see the yearly results. Long
run adjustments in prices and wages, and supply
and demand shocks are also included.
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Macro3 Module

• Initial Conditions
• Government Spending
• Taxes
• Money Supply
• Real GDP
• Consumption
• Investment
• Net Exports
• Inflation Rate
• Price Level
• Wage Level
• Unemployment Rate
• Exchange Rate
• Real Interest Rate

• State of the Macroeconomy
• Inflation
• Recession

• Short and Long Run Results
• Real GDP
• Consumption
• Investment
• Net Exports
• Unemployment Rate
• Inflation Rate
• Price Level
• Wage Level
• Real Interest Rate
• Exchange Rate

• Policy Decisions
• Government Spending
• Taxes
• Money Supply

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Exchange Module
Shows how the foreign exchange market works. You
change domestic or foreign supply or demand
factors and observe the effects on market
equilibrium. You may also regulate the market by
changing a fixed exchange rate and see the
results.
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Exchange Module

• Initial Conditions
• Domestic
• GDP
• Price Index
• Interest Rate
• Political Stability Index
• Foreign
• GDP
• Price Index
• Interest Rate
• Political Stability Index

• Initial Equilibrium
• Price
• Quantity

• Regulate Market
• Control Price
• Above Equilibrium
• Below Equilibrium

• Disturb Market
• Foreign or Domestic
• Real GDP
• Price Index
• Interest Rate
• Political Stability Index

• Results
• New Equilibrium Price and Quantity

• Results
• With Regulation
• Without Regulation

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Distribution Module
Shows the distribution of income in a society and
how that distribution can be affected by a number
of variables. You can also alter the
distribution of income by changing government
policies and by introducing non-governmental
disturbances.
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Distribution Module

• Initial Conditions
• Distribution of Income by Family
• Quintile Distribution

• Change the Distribution
• Economic Disturbance
• Policy Disturbance

• Output Results
• Distribution of Income by Family
• Quintile Distribution

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SimEcon Usage Recommendations

• Small classes - open format, essay
• Medium classes - mixed format, essay
• Large classes - templates, short answer

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SimEcon Assessment Methods

• Student Surveys
• Instructor Reviews and Surveys
• Paired Class Comparisons
• Paired Topic Comparisons