Capstone Project — Part 1: Microeconomic Analysis of Your City

Instructions

Apply Parts I–IV of the textbook to your chosen city. This section should be 5–7 pages and cover the following:

1. City Profile (1–2 pages)

• Population, demographics, geography
• Major employers and industries
• Headline economic indicators (median income, unemployment rate, poverty rate, median home price)
• Sources: Census Bureau (data.census.gov), BLS (bls.gov), FRED

2. Market Analysis (2–3 pages)

Choose ONE local market to analyze in depth using supply and demand: - Housing market (recommended): What is the current rent/price level? What has happened over the past 5 years? Apply the five shifters of demand and supply. Is the market in equilibrium? Is there a shortage or surplus? What is the role of zoning/regulation? - Labor market: What are the major employers? What wages do they pay? Is there monopsony power? What is the local unemployment rate relative to the national average? - A specific industry: food, healthcare, education, manufacturing, tech — choose one that matters to your city

For your chosen market, you should: - Draw (or describe) the supply-and-demand diagram - Identify at least two demand shifters and two supply shifters that have affected the market recently - Predict what will happen to price and quantity over the next 2–3 years

3. Market Failures (1–2 pages)

Identify at least ONE market failure in your city: - Externality (pollution, congestion, noise) - Public good (parks, infrastructure, public safety) - Information failure (healthcare, insurance, used-car markets) - Inequality (wage gaps, access gaps, neighborhood disparities)

For the market failure you identify: - Describe the failure using the framework from Chapters 11–16 - Identify the gap between the private and social outcomes - Propose a policy response and evaluate its tradeoffs

Data sources

• FRED (fred.stlouisfed.org) — economic data series
• Census Bureau (data.census.gov) — demographics, income, housing
• BLS (bls.gov) — employment, wages, prices
• Your city's planning department website — zoning maps, housing data
• Zillow/Redfin — housing price data
• Local newspaper archives — for recent economic events

Grading criteria (see rubric)

• Correct application of supply-and-demand framework
• Use of real data (not just impressions)
• Identification of market failure with proper economic reasoning
• Clear, well-organized writing

Millbrook model

Review the Millbrook examples from Chapters 5, 7, 11, 12, 17, 20, and 21 for the style and depth expected. Your analysis should be at least as detailed as the Millbrook housing case study from Chapter 5.