Description 
Your goal in this simulation is to maximize Ostrich Burger's profit by making decisions in response to changing market conditions. 

Short-Term Factors 
In the short run, Marge must decide how many burgers she'll produce or what price she will charge for them. You set these factors by adjusting the quantity and price sliders on the graph. Note that when you move one slider the other automatically changes according to the demand curve. Why? Because even though Ostrich Burger is a monopoly, it is still subject to the market demand curve. 

Long-Term Factors 
In the short run, Marge's restaurant is a fixed asset. But in the long run it is not--Marge can build larger or smaller facilities. If Marge built a larger restaurant, she would increase her capacity and could therefore make more burgers. On the graph, her cost curves would shift to the right. Conversely, if Marge scaled down to a smaller restaurant her cost curves would shift to the left. Why does Marge need to think about her plant size? Because if she wants to maximize her long-term profits, she needs to operate where she is most efficient: at or near the minimum of her average total cost (ATC) curve.  Hint: If Marge's profit-maximizing level of output is to the right of the minimum point on the ATC curve, she is probably in too small a plant. If her profit-maximizing level of output is to the left of her minimum ATC, she is probably in too large a plant. 

In the long run Marge can also change how much advertising she does. Increases in advertising will result in a corresponding rise in the demand for O-Burgers. However, advertising costs money, so Marge's total costs will go up. Conversely, less advertising will result in lower costs for Marge - but the demand for her product will drop as well. You should experiment with advertising to try and find the appropriate level of advertising for Marge's market conditions.

1.  When you start the simulation you are presented with a choice of market conditions. Browse the six different newspaper headlines and select one to begin with. 
2.  In each round, adjust short-term and/or long-term factors to maximize Ostrich Burger's profits. When you are ready with your response, click the "Accept Values" button. Keep your eye on the clock! You have 60 seconds to make your choices. 
3. At the end of each round, your profit will be shown in the table and the graph will be updated to reflect your response. The clock will reset for the next round and new market conditions will be displayed in the newspaper headline. At the end of five rounds, your total short-run profit will be calculated. 

Hint: You may want to practice maximizing profit by adjusting only short-term factors at first. Then, when you are comfortable with the simulation, you can add plant capacity and advertising as additional challenges. (Note that if only short-term changes are made, the graph and profit totals will be affected, but the market condition will not change, and the newspaper headline "Ostrich Burger Stays the Course" will continue to appear.) 

Abbreviations: 
P = price 
Q = quantity 
ATC = average total cost 
AVC = average variable cost 
MR = marginal revenue 
MC = marginal cost 
 
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