Easily Integrate These Wall Street Journal Articles in Your Class |
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Forget Revolution. More Like Renovation TOPICS: Manufacturing SUMMARY: Many manufacturers figure it makes more economic sense to refurbish old machinery at U.S. plants than to take a risk buying new. CLASSROOM APPLICATION: The article can be used as a case to analyze the economics of whether to replace existing machines with more-efficient ones. Students can compare the fixed cost of installing a new technology with the reduced variable cost of producing associated with doing so. Students can calculate break-even point and also how lower marginal costs of production associated with the new technology affect output and pricing decisions. QUESTIONS: Reviewed By: James Dearden, Lehigh University Mondelez Stirs Nestlé Challenge TOPICS: Monopoly, Oligopoly, patents, Pricing SUMMARY: A coffee war is brewing for Nestlé, as Mondelez International said it will begin selling coffee capsules from its Jacobs and Carte Noire brands that are designed to fit Nestlé's single-serving Nespresso machines. Nestlé would like the ability to lock owners of their Nespresso machines into using their own coffee pods. But, in April, Nestlé suffered a setback when a U.K court ruled that one competitor's coffee pods did not infringe on Nestlé patents. It lost a similar case in a German regional court last year. CLASSROOM APPLICATION: Students can analyze the effect of entry into the Nespresso coffee pod market on Nestlé's pricing decisions and profits. Relevant to the analysis, as the article notes, is that customers are loyal to the Nespresso coffee pods. Advanced students could use a modified Bertrand (with product differentiation) model to analyze this case. QUESTIONS: Reviewed By: James Dearden, Lehigh University Apple's 30% E-Book Commission Is 100% Legal TOPICS: Antitrust, Pricing SUMMARY: Despite the fed's claims, the company's revenue-sharing model is the opposite of price fixing. "Apple just passed 50 billion downloads of the 850,000 apps for its iPhones and iPads. For paid apps, developers get 70% of the sales revenue and Apple keeps 30%.... It is not, as the government alleges, a scheme Apple concocted to fix prices with book publishers.... Apple's agency model is the opposite of price fixing because it leaves prices to each publisher to decide. It only sets the share of the revenue it will take." CLASSROOM APPLICATION: Students can analyze two pricing models: (1) wholesale-retail pricing, in which wholesales set prices paid by retailers, and retailers set prices paid by final consumers; and (2) revenue sharing, in which wholesalers set retailer prices and then receive a share of retailer sales revenues. The issue is whether prices are higher under the revenue-sharing model than under the wholesale-retail pricing model. QUESTIONS: Reviewed By: James Dearden, Lehigh University
ECONOMICS MICRO for the week of 06/13/2013 Pickles and Cheese Puffs? B&G Snags Pirate's Booty by David Benoit 06-11-13 Click here to view the full article on WSJ.com 1. B&G Foods Inc., a grocery-brand holding company that owns pickles, tacos and condiments, is paying $195 million to buy the maker of Pirate's Booty, a rice and corn snack flavored with cheddar cheese. B&G Foods CEO David Wenner said the company is acquiring Pirate's Booty (a) because the company is undervalued. (b) despite the nutritional issues associated with packaged foods. (c) to move into the children's food market. (d) to move into the adult food market. (e) to boost B&G's growth. Asia's Environmental Activists Spread Their Roots by James Hookway 06-11-13 Click here to view the full article on WSJ.com 2. Asia has seen an unexpected rise of a potent green lobby in a region that is among the world's least welcoming for environmentalists. The Wall Street Journal reports that disenchantment over pollution is particularly acute in (a) China. (b) Indonesia. (c) Japan. (d) Thailand. (e) Vietnam. Indian Tire Maker Rolls Cooper Into $2.5 Billion Deal by Jeff Bennett and R. Jai Krishna 06-13-13 Click here to view the full article on WSJ.com 3. Indian tire maker Apollo Tyres agreed to acquire Cooper Tire & Rubber in a deal valued at about $2.5 billion that is the largest U.S. acquisition by an Indian company. The Wall Street Journal reports that the Indian company expects the acquisition will (a) reduce its costs of shipping tires to the U.S. market. (b) reduce its unit manufacturing costs. (c) boost its production of truck tires. (d) boost its exposure to the U.S. market. (e) boost its exposure in the European market. Growers Cut Back on Coffee and the Bulls Start Waking Up by Leslie Josephs and Alexandra Wexler 06-13-13 Click here to view the full article on WSJ.com 4. Coffee-bean prices have fallen 54% in the past two years. The drop has been so steep that longtime coffee farmers are (a) shifting some land to other uses, while boosting the production on the remaining acreage. (b) boosting the use of fertilizer to cut back on labor costs. (c) nixing the planting of new trees and rationing the use of fertilizer, yet are adding new land to coffee growing. (d) considering other uses for their land and rationing the use of fertilizer, yet are continuing to plant new trees. (e) considering other uses for their land, nixing the planting of new trees, and rationing the use of fertilizer. Can China's 'Red Flag' Win Prestige? by Rose Yu, Colum Murphy, Fanfan Wang, and Lilian Lin 06-08-13 Click here to view the full article on WSJ.com 5. Chinese auto makers are cranking up efforts to produce homegrown luxury cars that can compete with Audi, Cadillac and BMW. Chinese auto makers (a) are failing miserably at the prospect. (b) have yet to develop a popular luxury car. (c) have developed luxury cars that are popular only in China. (d) are showing signs of producing competitive luxury cars for the next model year. (e) are beginning to export these cars to their Asian neighbors. Subscribing professors can access the answer key for these questions by clicking on this link and entering your Wall Street Journal account number. (Click Here) |
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