Easily Integrate These Wall Street Journal Articles in Your Class
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Did you know that you can use these Weekly Review articles to easily assess your students' comprehension of course concepts and current events?

With our new WSJ Assessment Tool, they'll complete the online quizzes based on the articles and you'll have immediate access to their results.

You can learn more at WSJ.com/assessment.
THIS WEEK'S ARTICLES
Cable Cord-Cutters Beware: Prices Could Be Higher, Not Lower
The Allure of Uncertainty
Natural-Gas Prices Fall Even With Chill Nearing
Africa's Sugar Ambitions Turn Sour
The Seattle Seahawks' Big Problem

Cable Cord-Cutters Beware: Prices Could Be Higher, Not Lower
by: Joe Flint, Shalini Ramchandran, and Keach Hagey
Oct 17, 2014
Click here to view the full article on WSJ.com

TOPICS: Pricing a Product Line

SUMMARY: A future where television viewers subscribe to each channel they want could make the average cable TV bill-which hovers about $90-seem like a bargain.

CLASSROOM APPLICATION: Instructors can use the article to compare bundling and a la carte pricing. They can present bundling as a means to extract consumer surplus and also possibly as a means to improve economic efficiency (by providing goods should be, but are not, provided under a la carte pricing).

QUESTIONS: 
1. (Advanced) Consider a simple case in which two people can subscribe to a cable network, ESPN for example. Person 1 values the network at $10 and person 2 values it at $20. The total cost of providing the network to either one or two people is $25. Is it efficient to provide the network? Suppose a cable company charges each person the same price for the network. What is the minimum price for which the network would be provided? If the network is provided a la carte at this price, would both people subscribe to the network? Suppose the network is bundled with others in a cable package. In doing so, the price of the bundled package would increase by the minimum price needed to provide the network. Is it possible that both people would subscribe to the bundled package? If so, would the shift to bundled networks from a la carte pricing improve economic efficiency?

2. (Advanced) Consider two people. Person 1 values ESPN at $12 per month and Bravo at $5 per month. Person 2 values ESPN at $5 per month and Bravo at $12 per month. Suppose the total cost offering each network is zero. What is the profit-maximizing (i.e., revenue-maximizing) price of the bundled networks? What are the profit-maximizing prices of the a la carte networks? Does the cable company prefer to bundle the networks?

3. (Introductory) "All these things are so much more expensive when you separate them out," said David Bank, an analyst at RBC Capital Markets. "You are going to have to pay more for less choice." Does this statement imply that everyone would be made worse off by the shift from bundled network pricing to a la carte pricing? Is it the case that everyone would be made worse off?

Reviewed By: James Dearden, Lehigh University


The Allure of Uncertainty
by: Daniel Akst
Oct 19, 2014
Click here to view the full article on WSJ.com

TOPICS: Behavioral Economics, Risk and uncertainty

SUMMARY: Is there something especially compelling when the payoff isn't a sure thing? Experiments with water and Godiva chocolates show the allure of uncertainty. The article offers a summary of a new paper, "The Motivating-Uncertainty Effect: Uncertainty Increases Resource Investment in the Process of Reward Pursuit," by Luxi Shen, Ayelet Fishbach, and Christopher K. Hsee, Journal of Consumer Research (forthcoming).

CLASSROOM APPLICATION: Students can evaluate whether the decisions described in the article satisfy the assumption that more is preferred to less and whether the decisions are irrational (due to the language prompts).

QUESTIONS: 
1. (Introductory) Do the experimental results imply that some people like to gamble?

2. (Advanced) Consider the result that in some cases subjects preferred a gamble in which each possible payoff is less than a sure thing to the sure thing itself. Are these subjects in the experiment irrational?

3. (Advanced) Bidders preferred certainty when they were told that "the auctions are a way to get the coins at a good price." But they preferred uncertainty when told beforehand to "enjoy the auction." Do the effects of these verbal cues on decisions about risk imply that decisions are made irrationally?

Reviewed By: James Dearden, Lehigh University


Natural-Gas Prices Fall Even With Chill Nearing
by: Timothy Puko
Oct 20, 2014
Click here to view the full article on WSJ.com

TOPICS: Supply and Demand

SUMMARY: When cold weather looms across the U.S., natural-gas prices usually rise. This year they are falling, after a record production boom nearly replenished stockpiles left at their lowest since 2003 by last winter's freeze.

CLASSROOM APPLICATION: Students can use supply and demand to examine the effects of shifts in both demand and supply on the equilibrium price of natural gas. Also, they can compare factors, such as weather, that have differing effects on the prices of two major energy sources: natural gas and oil. Lastly, they can examine how bottlenecks in supply chains affect prices.

QUESTIONS: 
1. (Advanced) How do weather forecasts affect the price of natural gas? Why does the weather have a greater effect on the price of natural gas than it does on the price of oil?

2. (Advanced) During periods of high demand for natural gas, how do bottlenecks in the natural gas supply chain affect the price of natural gas?

3. (Introductory) Why did prices for prices for natural gas last week reach to their lowest point of 2014?

Reviewed By: James Dearden, Lehigh University


Africa's Sugar Ambitions Turn Sour
by: Nicholas Bariyo
Oct 21, 2014
Click here to view the full article on WSJ.com

TOPICS: Production, Supply and Demand

SUMMARY: Amazon and CBS Corp.'s Simon & Schuster have reached a new multiyear print and digital contract, a pact that comes as the online retailer continues difficult negotiations with Hachette Book Group.

CLASSROOM APPLICATION: Students can use supply and demand to analyze the effect of the increase in the worldwide supply of sugar on the equilibrium price of sugar. They can then examine the effect of the decrease in the price of sugar on the decisions by Africa's farmers about whether to exit the industry and also on the decisions by African countries about whether to exit the industry. Furthermore, they can examine the relationship between production costs in various countries and the pattern of sugar trade.

QUESTIONS: 
1. (Introductory) What factors have caused the increase in the world's supply of sugar?

2. (Advanced) Why are some African countries erecting sugar import barriers? What is the effect of these barriers on the wellbeing of consumers and of sugar farmers in these countries?

3. (Advanced) What factors determine the pattern of trade (i.e., which countries import and which export) in sugar?

Reviewed By: James Dearden, Lehigh University


The Seattle Seahawks' Big Problem
by: Kevin Clark
Oct 21, 2014
Click here to view the full article on WSJ.com

TOPICS: Sports Economics, Strategy

SUMMARY: The 3-3 Seattle Seahawks look nothing like the juggernaut that ripped through the NFL last season. The reason is the dismantling of the secret to their success, which occurred months ago and won't be easy to overcome now.

CLASSROOM APPLICATION: Similar to barriers to entry, mobility barriers can prevent lower-ranked NFL teams, at least in the short run, from reaching the upper-echelon of teams. In the case of the Seattle Seahawks, the franchise it appears could not build sufficient mobility barriers so as to maintain its dominance of the NFL. Students can study the reasons noted in the article for the breakdown of the franchise's mobility barriers.

QUESTIONS: 
1. (Advanced) What is the effect of the NFL's salary cap on the Seahawks' ability to retain their defensive linemen? Is the league's salary cap effective in improving competitive balance?

2. (Advanced) Research question. What is the concept of "barriers to mobility"?

3. (Introductory) What factors have prevented the Seattle Seahawks from maintaining the franchise's dominance of the NFL?

Reviewed By: James Dearden, Lehigh University


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