Ec 3750-Tansey
January 21, 2009
ASSIGNMENT 1 SUPPLY AND DEMAND SHIFT MEDIA EXERCISE
(Due Feb 3, 2009)
This assignment had the following learning goals set out for it.
3
Apply supply and demand theory with numerical and graphical examples of the
different types of market structure.
7 Identify market structure, conduct and performance based upon information in legal
cases, the media, economic reports, and visiting lectures.
8 Understand the theory of technological change and changes in structure of markets,
as well as how to measure these changes.
9 Recognize and know the tools for measuring the inter-relatedness of different
markets in the economy.
12 Acquire the habit of reading quality media often and critically and to do so using the
internet and digitized versions of the media.
13 Develop the capability for studying and turning in assignments PAPERLESSLY.
Find four articles, each of which illustrates just one shift in demand or one shift in supply
in accord with the following instructions. ALL ARTICLES MUST HAVE APPEARED
IN THE MEDIA AFTER THE FIRST DAY OF CLASS DURING THIS SEMESTER
Use each article to fulfill the following instructions and questions:
#1. Find and place in one WORD file an article to illustrate each one (and not more than
one) of the following four possible shifts of supply or demand:
a.
b.
c.
d.
Leftward (upward) shift of the supply curve.
Rightward (downward) shift of the supply curve.
Leftward (downward) shift of the demand curve.
Rightward (upward) shift of the demand curve.
In other words, each of these four shifts should be illustrated with one article. Put all four
articles in the word file entitled “MIC06SlastnameAssn01”.
#2.
Write down underneath each of your articles the shift of demand or supply (from
the possible answers in #1) that is best represented in the article. The shift may
already have occurred, may be occurring currently, or may occur in the future.
WATCH OUT! MOST ARTICLES HAVE MANY DIFFERENT SHIFTS.
YOU WANT TO MAKE THE BEST CASE FOR JUST ONE SHIFT.
EVERYTHING YOU INDICATE (UNDERLINE, CIRCLE, BRACKET, OR
COLOR) MUST BE CONSISTENT WITH THAT SHIFT.
#3
[Bracket] evidence in the article of whether the market is an
a. International market,
b. National market,
c. Regional market, or
d. Local market.
#4
Write down under the shift you chose in question #2 which of the four answers in
#3 best characterizes the market AND GIVE THE NAME OF THE MARKET.
#5. Underline in each article the single sentence (not more than a sentence) that
describes the change in the determinant of demand or supply that has caused the shift you
chose in #1 above.
#6.
Under your answer to #4 write down which determinant of demand or supply has
changed. Possible answers are: income, seller expectations, buyer expectations, number
of buyers, number of sellers, technological change, price of resources, price of
substitutes, price of complements, or tastes or preferences.
#7.
Place parentheses and paint (bold red) the word or phrase (not more than a
sentence) in each article that indicates through whom (buyer, seller) the change in the
determinant of demand or supply initially affects the market to cause the shift (in #2
above), ceteris paribus.
#8.
Under your answer to #6 write down "Buyer" or "Seller", reflecting through
whom the shift is initially caused.
#9. Circle and paint in bold blue the single sentence (not more than a sentence) of a
change in price or quantity that results from the shift in demand or supply. (Hint: make
sure the changes are consistent with the shift you chose in #2 above).
#10. Under your answer to #8, describe the changes in price and quantity that occur due
to the shift you have chosen to illustrate one of the following (use exactly these words):
a.
Price and quantity both rise.
b.
Price and quantity both fall.
c.
Price rises and quantity falls.
d.
Price falls and quantity rises.
#11. ABOVE the article write down (IN CAPITALIZED LETTERS) what type of market
the article is about AND GIVE THE NAME OF THE MARKET. Following are
the possible types of markets: monopoly, oligopoly, monopolistic competition,
competition, monopsony, oligopsony, bilateral oligopoly, and bilateral monopoly.
#12. Underneath your decision about what type of market (but above the article) place in
quotation marks after the word “Structure” evidence from the article (no more than a
sentence) of the market structure consistent with your choice of market type. After the
quotation write down {within brackets} which one of the following structural characteristics
is involved:
Number of sellers, Number of buyers, government intervention, product differentiation (or
standardization), barriers-to-entry, or economies of scale.
You need to look at both the number of sellers and buyers and THEN figure what
market structure applies. Here is the basic structure:
Many sellers
Few sellers
One seller
MANY
BUYERS
Competition
Oligopoly
Monopoly
FEW BUYERS
ONE BUYER
Oligopsony
Bilateral Oligopoly
Bilateral Oligopoly
Monopsony
Bilateral Oligopoly
Bilateral Monopoly
Product differentiation determines if you have monopolistic competition (it exists) or
perfect competition (it doesn't). Often you can assume that the number of sellers is
“MANY” when an article, particularly in the Wall Street Journal which tries to
mention names in bold print whenever it can, fails to mention the names of the sellers
involved in a market. They may simply refer to the firms in the plural eg. “The
suppliers have generally responded quickly to market incentives.” Generally, the
number of buyers, unless they are specifically mentioned, will also be “MANY”. Some
terminology such as “market share” or “dominant firm” is enough to suggest that
there are only a “FEW” firms that matter in the market. Articles that focus on one
firm and its relationship to a regulatory body that limits prices will typically be about
one seller and many buyers (i.e. monopoly). Articles about negotiations between
buyers and sellers typically imply no more than a few sellers and buyers. These are
just some of the kinds of evidence that you can use to figure the structure of a market.
Barriers-to-entry, such as foreclosing resources, indicate monopoly or oligopoly.
Foreclosure of distribution channels narrows down the choices to monopsony,
oligopsony, or possibly bilateral monopoly or oligopoly.
#13.
Directly beneath your previous answer place in quotation marks after the word
“Conduct:” evidence from the article (no more than a sentence) of the market conduct
consistent with your choice of market type. After the quotation write down {within
brackets} which one of the following conduct characteristics is involved: marginal cost
pricing, interdependence (eg. Conspiracy, litigation of government or competitors, corporate
spying, price wars, collusion, etc.), price setting (or price taking), output restriction,
advertising (eg. brand advertising, minimal advertising of price and quantity only), lobbying
the government, entry, or exit.
#14. Directly beneath your previous answer place in quotation marks after the word
“Performance:” evidence from the article (no more than a sentence) of the market
performance consistent with your choice of market type. After the quotation write down
{within brackets} which one of the following performance characteristics is involved: high
(low) prices, high (low) output or growth (including creation of shortages or surpluses), high
(low) profitability, inefficient production, high (low) quality
#15.
Give the reference (newspaper or magazine, date, page number) or the internet
site and the date for the media article you have used
Turn in for this assignment the word file containing the assignment. It should be
entitled “law09slastnameAssn01” and send it with the subject line under the same
name in WEBCT.
For the background on supply and demand shifts as well as how to
classify markets read the handout on cte.rockhurst.edu/tanseym.
Following are many corrected (red show my corrections) examples on
articles collected by previous students.
Student 1
First Article
Type of Market: Oligopoly
Market: Phone Service
Structure:” In the past year, Cingular Wireless and T-Mobile as well as Verizon
Wireless have gone to court against pretexters.” {number of sellers- few}
Conduct: Same quotation- litigation {litigation}
Performance: “Only in the past year or so has phone-company pretexting begun to
draw attention from law-enforcement officials, lawmakers and phone-service providers.”
{low quality}
Scams Seeking
Phone-Customer Data
Are Growing Threat
By DIONNE SEARCEY and SHAWN YOUNG
September 8, 2006; Page B1
Last year, the customer-service center at Verizon Wireless began receiving suspicious
calls from someone posing as a Verizon Wireless employee who was helping "voiceimpaired" customers gain access to their cellphone records.
"He just got out of the hospital with throat surgery" and couldn't make the call himself,
the caller told the customer-service representative in one instance, according to legal
filings.
But the caller was apparently operating a "pretexting" scam,
in effect calling under the pretext of being a representative
of the customer. (Pretexters also pretend to be the actual
customer.) Verizon sought an injunction to shut down the
caller's company and its affiliates, including Data Find
Solutions Inc. The companies were allegedly operating Web
sites that sold consumers' cellphone and regular phone
records for fees of $60 or more. A judge granted Verizon
Wireless's request.
Pretexting is a growing problem for phone companies, but it
is even more of a (problem for consumers). Private investigators, suspicious spouses
and an increasing number of data-mining companies are engaging in the practice. Only in
the past year or so has phone-company pretexting begun to draw attention from lawenforcement officials, lawmakers and phone-service providers.
In some instances, pretexters pretend to be phone-company employees seeking customer
phone records. In others, the callers already have enough personal information about the
actual customer to convince the phone company to let them access call records. This
week, pretexting arose as an issue at Hewlett-Packard Co., where the practice was used in
an internal board investigation to find out who was leaking company information to the
media.
[Phone companies] have been striking back with legal action. In the past year, Cingular
Wireless and T-Mobile as well as Verizon Wireless have gone to court against pretexters.
A smattering of antipretexting laws have passed in various states, and Congress is
mulling its own bills. Still, companies can't always spot pretexters. Some use "spoofing"
devices to make it appear as if they are phoning from a customer's actual phone. Others
use voice-changing devices, making male voices sound female, for example.
Corporations have tried to crack down by training employees to spot suspicious callers
and by aggressively pursuing legal action to shut down known pretexting companies.
While no method is foolproof, Verizon Communications Inc. urges its customers to set
up passwords even for phone conversations with customer-service representatives. In that
case, it requires the customers to present their passwords to the representatives before any
information can be divulged. Otherwise, customers must be able to recite information
provided only on their bills before they can access records. Verizon will also send
account information only to a customer's billing address.
AT&T Inc. declined to disclose actions it has taken to safeguard customer records for
fear of tipping off pretexters. In the past month, it has asked a court to stop two dozen
pretexters whom it accuses of fraudulently accessing 2,500 customer accounts. The
suspects in those instances were setting up online accounts to access bills.
READ KEY DOCUMENTS
See internal emails, a search warrant from the California attorney general's
office, SEC filings and other key documents in the H-P case.
In one complaint, AT&T said the pretexters in some cases would call the company to set
up the online account using spoofing devices to make it appear they were phoning from
their target's home phone. In other instances. they would simply go to the company's Web
site, enter the customer's phone number and the last four digits of the customer's Social
Security number and obtain an online account.
In its suits against pretexters claiming to aid disabled customers, Verizon Wireless
claimed that from Sept. 14 to Oct. 19, 2005, the defendants made 5,108 calls to the
company's customer-service centers to obtain records. In one of the cases, the caller
posed as "Anthony -- supervisor over at the special needs center" and said he was calling
on behalf of a voice-impaired customer. In another instance, a pretexter called posing as a
Verizon Wireless employee from "financial services," saying she needed help getting
data on a customer's account.
The alleged scam basically worked like this: The defendants adopted a pattern of posing
as Verizon Wireless workers helping disabled customers, who were also impostors. The
impostor customer was brought on the phone line with a customer-service representative
to verify information but was nearly impossible to understand, according to the
complaint. The caller then became impatient, insisting that the account had been verified
and the information should be handed over.
In one instance, the Verizon representative asked for the customer's name and the last
four digits of his Social Security number, according to the complaint.
"He's verified...ma'am," the caller said. "I need to hear that, though," the Verizon
representative replied.
The caller then put on another person to say his name and Social Security number, but the
words were unintelligible.
"O.K., I'm not understanding you," the Verizon worker said. At that point, the caller
asked to speak with a supervisor. That's when the scheme unraveled.
Attempts to reach representatives of the defendants in the alleged pretexting cases for
comment were unsuccessful.
#2
Leftward (downward) shift of the demand curve.
#4
International market- Phone market.
#6
Tastes and Preferences- Determinant of demand.
#8
Buyer.
#10
Price and quantity both fall.
#11 Wall Street Journal, September 8, 2006, B1. You are consistent, but I don’t think
your analysis is correct. It looks like the demand for pretexting is increasing! The supply
of services to perform it and to provide antidotes to it are also increasing. I don’t see how
you get less quantity in that situation. It’s also not clear from the article what the market
it that you are dealing with. Is it pretexting? What is it that is being sold in the market
place? If I were analyzing this I would look at something like detective services and say
the demand for those services was shifting to the right.
2nd Article
Type of Market: oligopoly
Market: internet retail firms
Structure:“With 37.6 million unique visitors to its site in July, Amazon is the ninth
most popular Internet brand, according to Nielsen/NetRatings” {number of sellers}
Conduct:”“ The new service is (Amazon.com's flashy foray) into the hot digital
download market “{easy entry}
Performance: “the hot digital download market” {high profitability or growth}
Good. !!!!
Amazon Debuts
Download Service
For Films, Shows
By JESSICA E. VASCELLARO
September 8, 2006; Page B3
Amazon.com Inc.'s new service offering downloads of thousands of full-length feature
films and TV shows went live yesterday.
Amazon Unbox, available at Amazon.com/Unbox, sells movies from most major
Hollywood studios for prices typically ranging from $7.99 to $14.99. Older releases, like
"The Matrix," generally cost less than newer releases, like "Inside Man." Customers can
also rent movies, which they must start watching within 30 days after they download
them, at various prices, with new releases at $3.99. New and old television shows from
networks like Fox, CBS and MTV are available for $1.99 each.
The new service is (Amazon.com's flashy foray) into the hot digital download market,
where the e-commerce behemoth is trying to stake its claim as the online retail business
begins to mature.
The announcement comes a few days before rival Apple Computer Inc. is expected to
debut its own movie downloading service, expected to sell movies for between $9.99 to
$14.99 each.
While several services, including Apple's iTunes, offer TV-show downloads, the new
services could jump-start the [online movie market], which has remained relatively small
because of studios' concerns about piracy and prices.
To start watching the content, customers must download the Unbox player and can
transfer the films and shows to Windows Media video-compatible portable devices.
Unlike iTunes, Amazon Unbox doesn't sell music tracks and declined to comment on
whether it would add them to the service in the future. Analysts say that Amazon, of
Seattle, could be holding off on entering the digital music market until its video service
gains traction. With 37.6 million unique visitors to its site in July, Amazon is the ninth
most popular Internet brand, according to Nielsen/NetRatings.
Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com
#2 Rightward (downward) shift of the supply curve.
#4 International market- Movie market.
#6 Technological change- A determinant of supply.
#8 Seller.
#10 Price falls and quantity rises.
#11 Wall Street Journal, Sept. 8, 2006, p. B3.
Good. !!!!
Third Article
Type of Market: competition
Market: Commercial Real Estate market in New Orleans
Structure:” New Orleans' apartment inventory because of hurricane damage and
conversions to condominiums. “ {suggests many sellers}
Conduct:” we definitely obtained a higher price because of Katrina “{price taking
i.e. they don’t control the market- Katrina does by increasing demand}
Performance:” housing shortage “{low output-negative growth}
Katrina Premium
In a sign of [New Orleans'] housing shortage, a 443-unit apartment complex has netted
$46 million, described by a sales broker as among the highest prices paid for a
multifamily property in the city.
The complex's owners, Ken Heller and Howard Stone, had a contract to sell the complex
right before Hurricane Katrina hit a year ago -- because they feared the area was
vulnerable to hurricanes. Since then, they've used nearly $10 million in insurance money
to repair the heavily damaged complex, known as Esplanade at City Park.
Mr. Heller says the $46 million was "considerably" more than the earlier contract price.
"(Demand is high) and we definitely obtained a higher price because of Katrina," he
adds.
Larry Schedler, the New Orleans-based broker who sold the property in partnership with
Cushman & Wakefield Inc., says the price is the highest he's seen in 25 years, reflecting
the loss of between 15% and 20% of New Orleans' apartment inventory because of
hurricane damage and conversions to condominiums. He calls the purchase
"encouraging."
The buyer was real-estate investor Jeffrey Feil and a partner, Ramius Capital Group LLC,
both based in Manhattan. In December, Mr. Feil bought an office building in the New
Orleans suburb of Metairie for $35 million.
#2
Rightward (downward) shift of the demand curve.
#4
Local market- Housing market.
#6
Tastes and Preferences- Determinant of demand.
#8
Buyer.
#10
Price and quantity rises.
#11
Wall Street Journal, September 6, 2006, p. B8.
4th Article
Good. !!!!
Type of Market: Competition
Market: Land
Structure:” China Plans Stricter Curbs “ {Government intervention} and
“Some new problems have (emerged in land management), such as an overly rapid
growth in the amount of land being used for construction, excessive expansion of lowcost land for industrial use, and irregular and illegal use of land” {many sellers}
Conduct: see quotation above {price-takers i.e. it is a change in demand,
not price setting by land owners that causes the price changes}
Performance:” imbalances in the economy's rapid growth. “{high growth}
China Plans Stricter Curbs,
Higher Taxes on Land Use
September 6, 2006
BEIJING – [China] will place stricter curbs on land use and raise related taxes and fees
for land used in construction, as part of its latest tightening efforts to correct imbalances
in the economy's rapid growth.
The guidelines issued yesterday by the State Council, China's highest executive body,
aim to strengthen macro-controls on land.
Some new problems have (emerged in land management), such as an overly rapid
growth in the amount of land being used for construction, excessive expansion of lowcost land for industrial use, and irregular and illegal use of land, the guidelines said.
China has clamped down on its property sector by tightening lending requirements and
limiting housing purchases by foreigners. The moves are part of a set of policies aimed at
tackling a rapid expansion in fixed-asset investment and credit, which underpinned the
economy's 11.3% year-to-year growth in the second quarter, the fastest rise in more than
a decade.
The guidelines said more layers of government approval will be needed for land use, and
illegal conversion of agricultural land for construction will be forbidden. There will be
higher fees for newly converted land for construction use, and higher taxes on urban-land
use, they said. The guidelines also call for stricter penalties for violations.
Additional measures targeting the property sector to cool housing prices have been
expected.
Monday, the official Xinhua news agency cited Ma Kai, China's economic-planning
minister, as saying government measures in the property sector in the second half of the
year would focus on the needs of local consumers, including adjusting supply by
increasing the amount of low- to midpriced housing and pushing ahead with a low-rental
housing system.
Irregular and illegal dealings in housing development and transactions are also reasons
for the rapid rise in house prices, Mr. Ma said.
#2
Leftward (upward) shift of the supply curve.
#4
National market- Land market.
#6
Taxes and Subsidies- Determinant of supply.
#8
Seller.
#10 Price rises and quantity falls.
#11 http://online.wsj.com/article/SB115748194376554093search.html?KEYWORDS=Taxes&COLLECTION=wsjie/6month , September 6, 2006.
This assignment had the following learning goals set out for it.
 (/10%) Demonstrate written communication skills by articulating and
supporting ideas using appropriate economic terminology
 (/10%) Develop the capability for studying and turning in assignments
PAPERLESSLY, using WEBCT, and correctly labeling BOTH the
assignment and the mail subject line as described in the instructions.
 (/20%) Acquire the habit of reading quality media often and critically
Excellent articles
 (/30%) Effectively grasp appropriate economic methodology.
 (20/30%) Use elementary microeconomic theory and models to understand
buyer and seller behavior in both the product and resource market.
In the one article (see comment below) you are needing to focus more
carefully on what the market is.
You have learned to check an article for supply and demand shifts, have done a
good job interpreting economic terminology and theory, and have turned in your
work early and paperlessly. Thanks for your efforts in learning this.
GRADE: 90%. Good work. Thanks for coming and working with me on the
EXCEL. Since the total possible points for the homework is 80 (There are five
homeworks for a total of 400 possible points), this percentage converts to 72
And your points for the semester so far, including your extra credit in class convert
to 122. Good work.
Student 2
Cory Coquillard
Mic 2100
Prof. Tansey
10 September 2006
ARTICLE #1
Aluminum's Power Shift
Access to Cheap Electricity,
Plentiful Natural Resources
Fuels Rise of New Producers
By PAUL GLADER
September 11, 2006
A new breed of aluminum makers, based in emerging economies and benefiting mainly
from access to inexpensive electricity, are gearing up to challenge the supremacy of the
industry's traditional giants, Alcoa Inc. and Alcan Inc.
The latest move came late last month, when (Rusal Ltd. began finalizing a three-way
agreement to take over Sual Group), [a fellow Russian aluminum company, as well as
the assets of Swiss commodities trader Glencore International AG. The new company
would have the capacity to churn out five million metric tons of aluminum a year,
outstripping the current No. 1 producer, Pittsburgh-based Alcoa, which has capacity for
four million metric tons.]
A combined company would have an advantage because Russia has abundant supplies of
natural gas, oil and hydroelectric power. Aluminum is the second-most power-intensive
industry in the world, behind pulp making and papermaking, according to CRU
International in London, and access to cheap power is fueling the rise of new producers.
Other new producers are arising in India, Africa and the Middle East, where they also
often benefit from either plentiful natural resources or abundant power.
Fueling the industry's growth is an explosion in demand for the lightweight metal, which
is increasingly used in goods from automobile-engine blocks to beer cans. Alcoa predicts
global consumption of aluminum will nearly double by 2020 to 60.6 million metric tons,
from 31.6 million metric tons in 2005. It predicts Asia will consume about half of the
world's aluminum by that time, with other emerging regions such as India, Brazil and
Russia also experiencing a surge in demand. That means as many as 80 new aluminum
smelters are needed by 2020, the company says.
Sohar Aluminum Co. is building a large smelter in Oman that will open in 2008, while
Aluminium Bahrain B.S.C (Alba) has built the Alba smelter, one of the lowest-cost
smelters in the world and the third-largest anywhere, with 3,000 employees and capacity
to make 840,000 tons of aluminum a year. Bahrain has plans to expand it to make as
much as 1.3 million metric tons a year.
Many of the new plants in the Middle East are partially owned by local governments,
which are eager to diversify their economies and create jobs for their fast-growing,
youthful populations. While the Middle East has relatively cheap power, it doesn't have
the abundant raw materials that Africa, India, North America, Australia and South
America have. And, China, while it consumes 30% of the world's aluminum, has cheap
labor costs but not abundant raw materials or cheap energy. So Chinese companies are
seeking partnerships with raw-materials producers in Australia and elsewhere.
It is the new wave of activity in Russia's aluminum industry that appears most likely to
shift the balance of power in the global aluminum business. "Because of our natural
[energy] advantages, we believe we have the ability to grow," says Peter Finnimore,
director of sales and marketing for Rusal. "We think we will be the largest."
Rusal has several new smelters planned as well as upgrades of existing smelters. Indeed,
the company already planned to hit five million tons of aluminum capacity on its own by
2013, even before it entered into talks with Sual and Glencore. It is also looking for
acquisitions and joint ventures.
Some executives at Alcoa and Alcan dismiss Rusal as having old, less-efficient smelter
technology.
For their part, Alcoa and Canada's Alcan, the world's No. 2 producer, have idled some
smelters in North America and Europe, where energy tends to be more expensive, and are
building ones in places such as Iceland, Trinidad and the Middle East.
Alcoa spokesman Kevin Lowery points out that the company owns power plants for
some aluminum smelters in North America, providing it with more-reasonable energy
prices, and says the company, in addition to currently planned new smelters, is
considering smelters in locations as varied as Brunei, Siberia and Pakistan. "There is not
a corner of the world we are not looking into right now," Mr. Lowery says.
Alcan's president and chief executive, Dick Evans, says the company is selling
technology to several of the up-and-coming smelters in the Middle East and notes that the
company has a 20% investment stake in the one in Oman. While many newcomers are
building low-cost, efficient plants, he doesn't believe those companies will be major
industry players for some time.
#2) This article represents Graph B. a rightward (downward) shift in the SUPPLY
curve.
#4)
Aluminum is an international market based on this article.
#6)
The determinant in supply is the availability of resources, because the
company will produce more aluminum.
#8)
Buyer. If it is a shift in supply, then the initial effect must be occurring with the
seller, not the buyer.
#10) a. Price has fallen, Quantity has risen. I think I mentioned in class that taking
over assets of other companies usually DECREASES supply because it cuts the number
of sellers.
#11) Article reference:
http://online.wsj.com/article/SB115793928702359085search.html?KEYWORDS=supply&COLLECTION=wsjie/6month
ARTICLE #2
Consumer Demand and Growth
In Laptops Leave Dell Behind
Company's Corporate Focus
Backfires as H-P Thrives;
Weighing Retail Stores
High Turnover at Call Centers
By CHRISTOPHER LAWTON
August 30, 2006; Page A1
To understand why the [world's largest personal-computer maker] is facing its worst
crisis in years, consider how Chris Conroy recently bought his new laptop computer.
Mr. Conroy, who works at a publisher of scientific journals in Washington, D.C., first
logged onto Dell Inc.'s Web site to browse personal-computer offerings online. But
because his old laptop was dying quickly, (the 31-year-old Conroy, figured buying a
PC) on the Internet and getting it shipped home would take too long.
So in late June, Mr. Conroy went to a Circuit City Stores Inc. store, which doesn't stock
any Dell computers. There, he checked out several laptops before snapping up a $1,200
Hewlett-Packard Co. model. "Most importantly, I could get my hands on it right then,
without having to worry about it being shipped," he says.
Mr. Conroy's experience signals a fundamental problem facing Dell. For years, Dell -famous for selling products directly over the phone and the Internet -- was a dynamo
thanks to bulk sales to corporations, mostly of desktop computers. Its direct-sales
business model made the Round Rock, Texas, company a widely admired paragon of
efficiency as it underpriced rivals such as H-P and Gateway Inc.
But in the past few years, buying behavior in the PC world has changed. Much of the
growth has come from consumer demand rather than the business market on which Dell
focused. What's more, people looking for a new home computer are increasingly turning
to laptops. There Dell is particularly weak: Its models lack the pizzazz and features of
rivals. For laptops especially, consumers prefer to hold and test models in a store, but
Dells aren't sold there. According to NPD Group, 56% of laptops sold to consumers in
the first quarter of this year were bought in a store, up from 50% two years ago.
Dell has largely ignored the consumer boom although it says it still considers consumers
an important market. For a while it had part-time workers with an annual turnover rate of
300% taking calls from customers who wanted to buy a PC. The company has poured
money into corporate products such as printers, storage systems and computer servers. It
nixed some overtures from retailers to sell its wares in stores. At a conference in 2004,
Dell Chief Executive Kevin Rollins declared, "We have never focused on the consumer
as a company."
At the same time, rivals such as H-P, Gateway and Apple Computer Inc., have charged
ahead in the consumer PC market. In particular, H-P cut costs to become competitive
with Dell, began working more closely with retailers and redoubled its marketing efforts.
As Dell cut prices, H-P invested in consumer-friendly features in its notebooks. H-P
computers, using a laser, can write a label on a specially coated music CD with artist and
title so users don't have to use a marker. And people can watch movies on H-P laptops
without booting up the computer, a feature that Dell now offers too.
Dell has missed sales or earnings projections three times in the past five quarters, most
recently posting a 51% drop in quarterly profit. The company took another hit two weeks
ago when it announced the recall of 4.1 million laptop batteries because they can
overheat and catch fire. Earlier this year, Dell expanded more slowly than the overall
U.S. PC market for the first time in more than a decade. In the most recent fiscal year,
while consumers made up about 30% of H-P's $86.7 billion in annual sales, according to
Sanford C. Bernstein & Co., Dell's consumer business constituted just 15% of its $55.9
billion in revenue.
Dell's stock is down more than 60% from its peak closing price of $58.13 on March 22,
2000. By comparison, H-P is up about 30% over the same period. The weak performance
is a huge comedown for Dell, whose stock was the No. 1 performer in the S&P 500 index
in the 1990s.
Dell is now scrambling to contain the damage. It is overhauling its Web site and
streamlining its pricing, and it has introduced a new consumer advertising campaign with
the tagline "Purely You." It has also opened a retail store for the first time and plans to
open another later this year. Overall, it's pumping $150 million into improving its image.
In May, it released a host of new products to target U.S. PC consumers.
Mr. Rollins, who took over from founder Michael Dell as chief executive in July 2004,
calls the consumer business volatile, and says it remains a secondary focus for the
company. But privately, he has admitted to some mistakes. At a May meeting with 50
Dell employees in Round Rock to discuss a change in direction for the company, the
CEO conceded that "historically we didn't pay enough time and attention to our customer
experience. Some of our competitors did."
Despite Dell's troubles, Mr. Rollins's tenure as CEO seems secure. Mr. Dell, who as of
June owned a 9.88% stake in the company valued at nearly $5 billion, remains chairman.
He has batted down suggestions that Mr. Rollins be replaced. Mr. Dell has said he shares
the responsibility for the company's problems and called Mr. Rollins an excellent chief
executive. A company spokesman notes that Mr. Rollins won the support of 98% of
shareholders at a shareholder meeting in July.
Still, some on Wall Street are pushing for Mr. Dell to take a more hands-on role.
Investors applauded Dell's recent acquisition of Miami's Alienware Corp., a maker of
high-end videogame PCs, for an undisclosed sum. The company has said that deal, which
boosted its offerings for consumers, was personally pushed by Mr. Dell.
The desktop market began cooling a few years ago as many companies slowed the pace
of upgrading their computers. Desktops represented 65.5% of world-wide PC shipments
last year, down from 78.8% in 2000, according to IDC.
Meanwhile, consumers gravitated to laptops as prices fell and new wireless technology
made them more useful at home and on the go. While corporate demand focused on
replacing the desktops employees already had, consumers were adding second, third and
fourth computers at home as mom, dad and the kids listened to digital music, shared
digital photos and played games.
Consumer laptop shipments more than doubled to 65.3 million world-wide in 2005 from
26.4 million in 2000, says IDC. By 2010, consumers will likely be buying more laptops
than corporations, predicts the research firm.
Even as these shifts took place, Dell stuck to its roots. Created in 1984 in Mr. Dell's
University of Texas dorm room, the company barreled through the 1980s and 1990s tech
boom using its direct-sales model. Mr. Rollins, who joined the company in 1996, advised
Dell in 1993 while he was a Bain & Co. consultant to get out of retail because there is
less profit in selling computers through stores.
As the tech downturn ended around 2003, Dell continued cutting costs and focused on
being efficient. Around that time, Dell executives decided to hire temporary workers to
man their five U.S. call centers, rather than recruit more-expensive full-time staff. By
2005, 75% of Dell's call-center staff -- those who take calls from customers wanting to
buy a PC -- were temporary workers. Three years earlier, the majority of those staffers
were full-time employees.
The move backfired. By late 2005, Dell noticed its U.S. consumer sales were flattening.
Ro Parra, a Dell senior vice president who was asked to look into the problem, pinpointed
call-center problems as one cause. He discovered that the temporary call-center workers
who wanted full-time jobs weren't being promoted. Turnover in the centers had soared to
300% a year from 30% in 2002.
"We were very efficient, and we made those decisions that work with the short term, but
they were really damaging to us over the long term," says Mr. Parra.
In late 2004, the profitability of Dell's consumer business began deteriorating. Dell told
Wall Street its competitors were cutting prices to gain market share at the expense of
profit, and said its focus was the high-end PC consumer. But Dell was also participating
in a price war, dropping its prices as low as $299 for desktops.
The stirrings of trouble at Dell coincided with a revival at H-P. After buying Compaq
Computer Corp. for $19 billion in 2002, H-P realized it had to cut costs to compete with
Dell. Larry Wuerz, vice president of manufacturing and supply chain for H-P's consumer
desktop PC business, says H-P reduced the number of contract factories that build its PCs
to 10 from 24 between May 2002 and 2003.
In early 2005, H-P's board ousted Chief Executive Carly Fiorina, who had engineered the
Compaq deal. Her replacement, Mark Hurd, quickly devised a plan to cut costs further.
He separated H-P's printing business from its PC business and hired Todd Bradley, the
former chief executive of handheld computer maker palmOne Inc., to run PCs. H-P
played chip makers Advanced Micro Devices Inc. and Intel Corp. against each other,
wringing out cheaper chip prices. (Dell recently said it too will begin using AMD chips.)
H-P worked to build a stronger partnership with retailers. In May 2005, H-P teamed with
Wal-Mart Stores Inc. to create a build-your-own-PC program inside Wal-Mart's Rogers,
Ark., store, a program that has since been expanded to other stores. H-P for the first time
also dispatched 55 of its district managers to roam retail stores and help customers during
the 2005 back-to-school season.
As Dell's consumer business sagged, the company discussed displaying its computers in
retail stores as a way of luring customers to its direct-sales operations, according to a
person familiar with the matter.
In late 2004, Dell met with retailer CompUSA Inc., this person says. The two got close to
signing a distribution deal for Dell to sell its computers in CompUSA stores. Executives
discussed both selling the computers directly through kiosks in the stores and CompUSA
keeping Dell inventory in the stores, says this person. But the discussions ultimately
broke down over the size of the margins CompUSA would get, this person says.
Dell confirms it has had talks with retailers, but says it didn't consider keeping inventory
in any stores. "We've not found an approach yet that serves our customers better than the
direct model," says Jess Blackburn, a Dell spokesman. A CompUSA spokeswoman
declined to comment.
Dell also rolled out some new products to woo consumers. In October 2004, it released
its first plasma-screen television sets, a digital music player and a new photo printer with
a built-in display to preview photos. But some consumers were wary about buying some
of those products sight unseen from a company not known as a consumer-electronics
maker.
In November 2005, Dell reported shrinking consumer revenues. Aiming to cut costs
further, Dell announced it was merging its U.S. consumer business into its overall
Americas business.
Several Dell executives left the company. Randy Mott, Dell's chief information officer,
joined H-P in July 2005. Mike George, general manager of Dell's U.S. consumer
business, left in October. He is now chief executive of Liberty Media Corp.'s QVC
shopping network. William Amelio, head of Dell's Asia-Pacific and Japan business, left
in December to head Lenovo Group Ltd. Mr. Rollins has said people left for better
opportunities that weren't available at Dell.
In November 2005, Dell took a baby step toward changing its consumer strategy by
selling through retailer Costco Wholesale Corp. for the first time. Dell says it worked
with Costco because it was coming to the end of a product cycle and could shed a small
number of units to sell in Costco stores. Dell calls the in-store presence a one-time deal.
Ginnie Roeglin, a senior vice president at Costco, says the retailer would like to do more
business with Dell if it is interested.
Last month Dell opened its own first retail store in NorthPark Center, a Dallas mall.
Customers can check out models and place an order for delivery later but they can't bring
home a computer right away. It's the furthest the company has gone in retail, although it
already operates more than 170 kiosks in malls around the country where consumers can
see and order a selection of Dell products. Jim Skelding, Dell's sales director, says the
company decided to open full-scale stores this year -- another one is to open in New York
later this year -- because it had run out of places for kiosks. He says Dell executives now
realize consumers want to see laptops and other products in action before buying.
In May, the company pledged $100 million to improve the "customer experience,"
including hiring more than 2,000 new U.S. sales and support staff. Of those, 1,300 will be
full-time sales people hired for its call centers. It has since added another $50 million to
the effort. Internal Dell data show that its efforts are reducing call volumes and call
transfers for customers.
#2)
#4)
The article represents C. a leftward (downward) shift in the DEMAND curve.
Dell computers are an international market, based on this article.
#6)
Availability of resources is causing Dell computers to lose money
because computers are only offered online.
The demand determinants in the readings with this assignment were listed as
“preferences and tastes, buyer expectations, income, complementary goods, and
substitute goods.” When market demand is considered “number of buyers” also is
considered a determinant. Although not a determinant of demand, price affects
how much quantity demand there is. So the possible determinants that you should
search for evidence of are:
preferences and tastes
buyer expectations
income
complementary goods
substitute goods
number of buyers
price
Try to make any demand determinants that you find in an article fit into one of
those determinants. By contrast your supply determinants include technology,
supplier expectations, price and availability of resources, and the number of
suppliers. Demand shifts occur only through the buyer and supply shifts occur
only through the seller. For each shift you want to classify a particular quotation
in the article as one of these explicit demand or supply determinants. Then you
want to be consistent in showing shifts of demand that are due to changes in a
demand determinant or shifts in supply that due to changes in supply
determinants. In your article, availability of resources would be a supply
determinant, but you categorize what is happening as a demand shift.
#8)
Buyer.
#10) b. Price and Quantity have both fallen.
#11) Article reference:
http://online.wsj.com/article/SB115689887806349051search.html?KEYWORDS=consumer+demand+and+growth+in+laptops+leave+dell+beh
ind&COLLECTION=wsjie/6month
Article #3
Intel to Slash 10%
Of Work Force
In Restructuring
Cuts, Unit Sales Are Seen
Saving $3 Billion Annually
Amid Push for Lower Prices
By DON CLARK
September 6, 2006; Page A3
Intel Corp. said it will cut 10,500 jobs, or about 10% of its work force, as part of the most
significant restructuring at the chip giant since the 1980s.
The long-awaited expense reductions are expected to trim Intel's work force from
102,500 employees, where it stood at the end of the second quarter, to 95,000 by the end
of the year and to approximately 92,000 by mid-2007. (Intel said the restructuring
moves, which include sales) of underperforming business units, should generate $2
billion in cost savings in 2007 -- a figure that it expects to increase to $3 billion in
savings annually. The company, which also expects to save $1 billion on capital
spending, put severance costs at $200 million by next year.
Intel's actions are a result of an internal review announced in late April by Paul Otellini,
the company's chief executive. "These actions, while difficult, are essential to Intel
becoming a more agile and efficient company, not just for this year or the next, but for
years to come," he said in prepared remarks.
The [Santa Clara, Calif., company], known for the microprocessors that serve as
calculating engines in personal computers, has been hurt by stiff competition from
Advanced Micro Devices Inc., a once-erratic upstart that has transformed itself into a
technology innovator. In response, Intel has launched a slew of well-received products,
while igniting a price war with AMD that has squeezed both companies' profit margins.
Intel's net income dropped 38% in the first quarter and 57% in the second period.
Mr. Otellini acknowledged in a letter to employees that the restructuring would be
"wrenching," but was necessary because of "new realities" in the market. The company is
coming to grips with structural changes in the computer industry, which include slowing
expansion and a push toward desktop and laptop PCs at lower system prices.
Intel is also facing the prospect that AMD will remain a credible competitor. Those two
forces will keep up the pressure on Intel's chip prices -- and consequently its operating
costs.
The company compounded its recent problems by engaging in rapid hiring in 2005.
Revenue rose 13.5%, to $38.8 billion, but the company's work force rose even faster,
jumping 17% to nearly 100,000 employees. By the end of March, Intel's head count stood
at 103,000.
The company announced a move this summer to cut 1,000 management jobs, noting that
its ranks of managers had increased faster than its overall head count and had slowed
decision-making at the company.
Intel has also pursued a number of unprofitable businesses, including communications
systems and chip companies that were purchased during the Internet bubble in a
diversification strategy that failed to gain much traction. Since April, the company has
announced plans to sell off some communications-related businesses, and more such
transactions are expected.
Analyst speculation has focused, in part, on Intel's business in flash-memory chips, which
are used to store information in devices such as cellphones. The unit posted a $149
million operating loss for the second quarter. Intel's "all other" segment, which contains a
variety of new businesses and some general corporate expenses, posted a $656 million
loss.
Chuck Mulloy, an Intel spokesman, said the company had no other divestitures to
announce now but didn't rule out the possibility of more.
Mr. Mulloy said about 5,000 jobs have been identified for elimination -- through attrition,
units that have been sold and previously announced management layoffs. Other job
reductions this year will mainly target additional management, marketing and
information-technology functions. In 2007, Intel said, the job cuts will be more "broadly
based." The company isn't providing much detail about what categories of jobs, business
units or geographic locations will be affected by the reductions.
Intel's announced cuts are smaller than some analysts had expected. The company's stock,
which traded at $19.99, up 11 cents, at 4 p.m. on the Nasdaq Stock Market, edged down
to $19.73 in after-hours trading.
Intel's last big restructuring came in the mid-1980s, when it decided to abandon the
market for memory chips known as DRAMs.
#2)
The article represents A. a leftward (upward) shift in the SUPPLY curve.
#4)
Intel Corp. computers is a NATIONAL market, based on this article.
#6)
Availability in of resources because Intel will make fewer but more
efficient products causing prices to rise.Be careful when you use words like efficiencythat usually means they are cutting costs, but lower resource prices would mean that the
supply curve would shift rightward. The problem here is really that demand has shifted
(“underperforming business units” indicates they are not selling as much as planned
which usually means there is not enough demand for their product)
#8)
Seller.
#10)
c. Prices rises and quantity falls.
#11)
Article reference:
http://online.wsj.com/article/SB115748747476254216search.html?KEYWORDS=intel+to+slash+10%25+of+work+force+in+restructuring&C
OLLECTION=wsjie/6month
Article #4GOOD!!!
Notre Dame Football
Introduces Its Fans
To Inflationary Spiral
People With Rooms, Tickets
To Sell Find No Ceiling;
The $500 Parking Space
By ILAN BRAT
September 7, 2006; Page A1
SOUTH BEND, Ind. -- For years, Anthony Gallis, of Dallas, Pa., has rented a house here
for $1,200 a weekend to stay in when he takes his wife and four children to see Notre
Dame games. But for this year's home-opener Saturday against rival Penn State, his usual
house had been rented for months, by somebody else. Another house suggested to him, at
$3,000, has also been taken.
Mr. Gallis ended up reserving a suite at a[Hampton Inn and Suites in South Bend,]which
normally goes for $129 a night, for $400 a night, with a three-night minimum. "It's just
insane," says the 42-year-old owner of a State Farm Insurance agency back in
Pennsylvania.
At Notre Dame, where the college-football tradition of Knute Rockne, the Four
Horsemen and the Gipper has a mythic aura, alumni and fans have long filled the stadium
and packed hotels within 50 miles on Saturday game days. But the frenzy for home
games this year is extreme even by Notre Dame's manic standards.
Ticket requests for home games hit unprecedented levels. (Prices online for everything
from pregame parties to game tickets and rental houses and hotels have soared): A
mere parking pass for the Penn State game recently sold on eBay for $500. Another eBay
buyer spent $3,200 for two $59 tickets to the same game. To cater to well-heeled Notre
Dame alumni, the regional airport has added parking space for up to 100 more private
jets.
Even the price of prime rib at Tippecanoe Place, a local steak and seafood restaurant, will
rise a couple of dollars on the busiest Notre Dame weekends. "We only raise our prices a
dollar or two," says General Manager David Barry. "The hotels went for the throat."
Indeed, rates for many of the 4,015 hotel rooms in the South Bend area are skyrocketing.
Two weeks before the start of the season, the Comfort Suites here was asking $245 a
night, with a two-night minimum, for the Penn State weekend. That's up from $109 a
night on non-football weekends. For the Sept. 16 game against the University of
Michigan, the South Bend Marriott is charging $649 a night for a double room. That's
more than the price of a room at the Waldorf-Astoria Hotel in New York. The Marriott's
regular weekend price is $149 a night.
The craziness is fueled in part by hotel, home and ticket owners using the Internet to
reach the highest possible bidders for scarce resources. It is also propelled by
championship-starved Notre Dame fans driven into a speculative frenzy by media and
Internet hype about a season billed as a "return to glory."
Expectations began soaring last year when new coach Charlie Weis reversed a decade of
mainly mediocre seasons with a 9-3 record. This season, returning quarterback Brady
Quinn, a contender for the Heisman Trophy awarded annually to college football's best
player, leads a team ranked second in the country behind Ohio State University in the
Associated Press preseason poll of sports writers. (After last weekend's lackluster 14-10
win against Georgia Tech, the ranking dropped to No. 4.)
Each year, the school conducts a lottery to parcel out the 30,000 seats available to
contributors, former athletes and parents in the 80,000-seat stadium. Saturday's game
against Penn State fetched 66,670 ticket requests, topping the previous record of 59,368
requests for a game against West Virginia University in 2001. Three other home games
this season rank among the 10 most-requested Notre Dame tickets ever, according to Josh
Berlo, director of ticket operations in the athletics department. Once all the tickets were
allocated for the season, the university refunded $11.7 million in deposits, more than
twice last year's refund of $5.2 million.
A university spokesman says Notre Dame "is pleased to be an economic engine" for the
area but would not judge whether businesses are behaving fairly.
Marriott defends its pricing, saying it's one of the top hotels in the area and this is a highdemand period. "Our hotel, and the other hotels in the market, have set their rates
according to that demand," says a spokesman in an email.
A spokesman for Choice Hotels International Inc., the franchiser of Comfort Suites, says
rates are set by the individual hotels and are "dictated by what the market will bear."
Hampton and other hotel chains make the same point about demand-based pricing.
Notre Dame, an independent, Catholic university with more than 11,000 undergraduate
and graduate students, was founded in 1842 by a priest of the Congregation of the Holy
Cross. A priest in the congregation still serves as its president today.
On a campus where a mural of Jesus overlooks the stadium and about 10% of students
spend a year after graduation working with the poor, business owners' efforts to cash in
on high demand causes some consternation. "It is an act of moral abdication" for
businesses to pretend they have no choice but to charge as much as they can based on
supply and demand, says Joe Holt, a former Jesuit priest who teaches ethics in Notre
Dame's executive MBA program. Mr. Holt intends to use the hotel rates as a case study
this fall for a class on business and values integration.
"It is the economic version of 'The devil made me do it,' " he says.
Still, he's wrestling with the dilemma himself. Last year, he rented out his South Bend
home to two couples for a total of $1,000 during a home-game weekend (he spent the
weekend at his other home in Chicago). This year, three couples offered him $1,500 to
$1,800 to share the house for the Penn State game. He ended up asking $1,500. He says
he bought a new mattress and linens for an empty third bedroom so he could
accommodate all three couples. He jokes he'll even put mints on the pillows.
During Notre Dame's last championship season, in 1988, hotel prices were lower, even
allowing for inflation. Bernie Kish, former executive director of the College Football Hall
of Fame in South Bend and a current professor at the University of Kansas in Lawrence,
says the Marriott in South Bend that season was charging $125 a night on the weekend he
saw the game against Stanford. That's about $214 in today's dollars.
With hotel rooms in short supply, Jim Crandall isn't taking any chances. He plunked
down $280,000 to buy two rooms in a new condo-hotel near campus.
"I'm so ramped up, I can barely contain myself," says Mr. Crandall, a 41-year-old bond
salesman at a Wall Street investment bank who lives in Essex Fells, N.J. His wife will
use the rooms about half a dozen times while serving on a Native American alumni
committee at the school. He and his family will stay in them to see four home games this
year. "I'll never have to worry again about having a place to stay for a football game," he
says.
Mike Brenan, the developer of the condo-hotel, is benefiting from the team's surge. He
has already sold 126 of the 200 rooms in his new Waterford Estates Lodge -- a renovated
former Ramada Inn. The rooms initially were priced at $90,000 to $130,000 for a 16-foot
by 24-foot space equipped with two double beds, a flat-screen television and a bathroom
with granite countertops.
Other college towns cash in on sports fever, too. At a Marriott near Auburn, Ala., home
of Auburn University, a room for a Sept. 16 game is $203, compared with $129 the
previous weekend. In Norman, Okla., home of the University of Oklahoma, the Holiday
Inn is charging $159 a night on big-game weekends versus $95 on weekends when the
team is out of town.
At South Bend's tiny airport, the surge of interest in the team created a parking nightmare
for private aircraft. Last year, for the home game against the University of Southern
California, 270 private jets landed by kickoff, shattering the previous record of 172. That
overwhelmed the parking area maintained by Corporate Wings, an on-site service and
refueling company. The company was forced to station dozens of planes side-by-side on
one of the runways.
After the game, John Schalliol, the airport's executive director, and other employees spent
six hours ferrying passengers from the terminal to their planes in vans, navigating
between jets zooming to lift off.
"What a bad day that was for me. Ugh," he says.
To keep that from happening again, Mr. Schalliol this summer had a seven-acre,
$750,000 parking lot constructed just for private jets. He finished the project in time for
the first home game.
#2)
This article represents D. a rightward (upward shift in the DEMAND curve.
#4)
The hotels in South Bend is in a LOCAL market, based on this article.
#6)
# of buyers has caused the increased demand in hotel rooms.
#8)
Buyer
#10)
a. Price and Quantity both rise.
#11)
Article reference:
http://online.wsj.com/article/SB115758558092655764search.html?KEYWORDS=notre+dame+hotels&COLLECTION=wsjie/6month
This assignment had the following learning goals set out for it.
 (/10%) Demonstrate written communication skills by articulating and
supporting ideas using appropriate economic terminology
 (/10%) Develop the capability for studying and turning in assignments
PAPERLESSLY, using WEBCT, and correctly labeling BOTH the
assignment and the mail subject line as described in the instructions.
 (/20%) Acquire the habit of reading quality media often and critically
Excellen t articles
 (15/30%) Effectively grasp appropriate economic methodology.
You are having some difficulty telling a consistent story- see comments above.
 (25/30%) Use elementary microeconomic theory and models to understand
buyer and seller behavior in both the product and resource market. You are
making good progress, but see comments above.
You have learned to check an article for supply and demand shifts, have done a
good job interpreting economic terminology and theory, and have turned in your
work early and paperlessly. Thanks for your efforts in learning this.
GRADE: 80% Since the total possible points for the homework is 80 (There are five
homeworks for a total of 400 possible points), this percentage converts to 64
And your points for the semester so far, including your extra credit in convert to 94.
Student 3
Vodafone plans broadband Internet for customers in Britain
1 hour, 37 minutes ago
LONDON (AFP) – [British mobile phone giant] (Vodafone said it planned to launch a high-speed
broadband Internet service) for its [millions of customers in Britain].
Vodafone said it would enter the broadband market "before the end of the year" after striking a
deal with British telecoms operator BT Group.
Vodafone's [16.2 million Britain-based] customers would be offered the option of subscribing to
the broadband service in their homes, mirroring similar initiatives recently announced by rival
mobile phone groups including O2 and Orange.
British satellite television giant BSkyB has recently begun offering broadband connections to its
customers.
"Today's announcement is a strategically important step in the evolution of Vodafone's business
in the UK," Vodafone UK chief executive Nick Read said in a statement Monday.
“Choosing BT as our partner enables us to provide high quality fixed-line broadband services to
customers quickly and cost-efficiently right across the UK."
Financial details of Vodafone's deal with BT were not disclosed.
Leftward (upward) shift of the supply curve is best represented in this article.
You are showing an inconsistency between what is happening to price and quantity
(which are supposed to be circled) and the kind of shift that is occurring. The
following picture shows what shift should correspond to which combination of changes
in price and quantity:
Lower Price
Lower
Output
Higher Price
Leftward
(downward)
Shift of Demand
Leftward
(upward)
Shift of
Supply
Higher
Output
Rightward
(downward)
Shift of
Supply
Rightward
(upward)
Shift of Demand
Breakdown all shifts into their output and price vectors
Notice how the picture of the leftward shift of the supply curve corresponds to
“higher price” above and “lower output” to the left. That is the opposite of what
Remember, a downward shift in the supply
curve (B) is equivalent to a RISE in supply. An upward
shift in the supply curve (A) is equivalent to a Fall in
supply.
you say below.
Even though this is an international company, the article deals only with its
UK division. The market is the Broadband Phone Service market.
The primary determinant is the number of sellers, but the industry is fueled by
technological changes.
The shift is initially caused by the Seller.
Price falls and quantity rises.
http://news.yahoo.com/s/afp/20060911/tc_afp/britaintelecominternetmobilebu
sinesscompanyvodafone;_ylt=AgPd1L0WITcnEXUbxB1egrqyBhIF;_ylu=X3o
DMTA0cDJlYmhvBHNlYwM-
September 11, 2006
Campbell Q4 profit falls on units' sale costs
1 hour, 9 minutes ago
CHICAGO (Reuters) - Campbell Soup Co. (NYSE:CPB - news) on Monday posted lower quarterly profits, pressured by costs from
the sale of its [U.K. and Irish businesses], pushing its shares down more than 2 percent.
The company, which makes soup, Godiva chocolate and Pepperidge Farm cookies, said profit fell to $44 million, or 11
cents a share, in the fiscal fourth quarter ended July 30, from $96 million, or 23 cents a share, in the year-earlier period.
Excluding one-time items, earnings from continuing operations were 18 cents a share, compared with the average analyst
expectation of 21 cents a share, according to Reuters Estimates.
Campbell shares fell 90 cents to $36.28 on the New York Stock Exchange.
[Campbell sold its U.K. and Irish soup and flour businesses] to Premier Foods Plc (PFD.L) during the quarter and
recorded expenses of 15 cents a share.
Sales rose less than 1 percent to $1.45 billion in what is typically Campbell's slowest quarter each year, though sales from
continuing operations were up 4 percent. The businesses sold to Premier Foods were classified as discontinued
operations in the fourth quarter.
The company also forecast an increase of 3 percent to 4 percent in sales from continuing operations in 2007, with
earnings per share rising 5 percent to 7 percent in 2007 from pro forma earnings of $1.73 in fiscal year 2006.
Like many food companies, ( Campbell has raised prices) to offset higher costs for energy and ingredients. The company
has also rolled out several new products, including soups made with a special sea salt lower in sodium.
Total U.S. soup, sauce and beverage sales rose 7 percent to $556 million, with soup sales alone up 9 percent.
International soup and sauce sales rose 2 percent to $260 million.
Baking and snack food sales were down slightly at $438 million.
Leftward (downward) shift of the supply curve is best represented in this
article.[this is the same mistake as above- so you must reverse your thinking on
this]
The article states that Campbell’s was an international company until it sold its
UK divisions, but it doesn’t make it clear whether it still has international dealings,
though can be assumed it does. The market is the canned & dry goods market.
The primary determinant is the price of substitutes, as evidenced by the fact that
the market sales rose, but Campbell’s did not.
The shift is initially caused by the Buyer.
Price rises and quantity falls.
September 11, 2006
http://news.yahoo.com/s/nm/20060911/bs_nm/food_campbell_earns_dc;_ylt=AlsJzIHSLqtq9G0raHy2SxGyBhIF;_ylu=X3oDMTA0cDJlYmhvBHNlYwM-
Judge blocks drilling in national oil reserve
Bush administration hasn't shown data on cumulative impact, he
says
Updated: 9:45 a.m. CT Sept 8, 2006
ANCHORAGE, Alaska - The Bush administration is faced with reworking its proposal to lease more than 1
million acres in the National Petroleum Reserve-Alaska after a judge on Thursday temporarily halted the
project in a lawsuit by environmentalists.
Nearly 13 million acres of the reserve in northern Alaska are available for lease sale or have been sold to
oil companies, most notably ConocoPhillips. The company hopes to augment waning crude stocks in the
Prudhoe Bay fields east of the NPR-A.
(Environmentalists filed the lawsuit) against the Department of the Interior, the state of Alaska and oil
companies in hopes of cordoning off about 600,000 acres of the 23-million acre reserve from more
exploratory drilling. The government had planned to open bids on Sept. 27 for about 1.7 million acres,
which encompass the area targeted by environmentalists.
ConocoPhillips has its eye on the contested area, which holds a potential 2 billion barrels of oil beneath the
permafrost near Lake Teshekpuk.
The order, filed in U.S. District Court in Anchorage, said the government had not adequately considered
the cumulative environmental effects of the lease sales in the eastern and western sections of the reserve.
Legal violation cited
Environmental impact statements addressed the effects of leasing individual parcels, but those reports
were too narrow in scope because they did not consider how leasing in the northeastern part of the
reserve would affect land and wildlife in the northwestern section, according to the judge's order.
U.S. District Judge James Singleton chastised the defendants for the oversight, writing that they “violated
the National Environmental Protection Act.”
The Department of the Interior and ConocoPhillips did not immediately return messages left late
Thursday.
Singleton is expected to make a final ruling the last week of September, said Charles Clusen, director of
the Alaska project for the Natural Resources Defense Council based in Washington, D.C., one of the
plaintiffs.
The government set aside the NPR-A in 1923 for energy development.
Interior Secretary Dirk Kempthorne, whose department is in charge of the lease sale, flew over the lake
area last week. He said afterward that he was convinced a restricted drilling plan could accommodate
energy development and wildlife protection.
The lease plan would allow for caribou migration by banning some areas to drilling and set up buffers to
protect geese molting areas, Henri Bisson, the Bureau of Land Management’s Alaska director, has said.
What activists want
Environmental groups said they only want to preserve the most sensitive fractions of land and don’t aim
to block exploration in the arctic oil reserve.
“Kempthorne can go ahead with the lease sale of the northwest and the rest of the northeast sections, but
he has to leave this part alone,” Clusen said. “We’re not asking to shut everything down, we’re just going
after the most valuable wildlife area.”
Other plaintiffs are the National Audubon Society, the Alaska Wilderness League, Center for Biological
Diversity, Northern Alaska Environmental Center, Sierra Club and the Wilderness Society.
Primary defendants include the federal Bureau of Land Management and the U.S. Fish and Wildlife
Service.
© 2006 The Associated Press. All rights reserved. This material may not be published, broadcast,
rewritten or redistributed.
Rightward (downward) shift of the supply curve is best represented in this article.
You have already illustrated the supply shifts. You need two demand shifts.
The Market is the Oil Industry, which is an international market.
The primary determinant is the federal litigation, shown by the lawsuit against the
BLM and USFS.
The shift is initially caused by the Buyer, the activists who are essentially setting
up an oil price rise.
When there is a demand shift the initial event must be occurring to the buyer. When there is
a supply shift the initial event must be occurring to the seller. This is always true.
Price rises and quantity falls.
September 8, 2006
http://msnbc.msn.com/id/14732611/?from=ET
Lower Manhattan shows signs of recovery
Despite Ground Zero delays, residential and commercial real estate
booms
By Roland Jones
Business editor
MSNBC
Updated: 1 hour, 56 minutes ago
It’s a sign of the resurgence of Lower Manhattan that few would have bet on.
Earlier this summer Tiffany & Co. said it plans to bring its famous blue boxes to the
immediate vicinity of the New York Stock Exchange. The world-famous jewelry company
will open a new store at 37 Wall Street in the fall of 2007. The draw: A boom in
commercial rentals and a horde of new, high-end residential properties and the wealthy
shoppers that usually go with them.
It has been five years since the terrorist attacks of Sept. 11, 2001, laid waste to the
World Trade Center, but today Ground Zero remains little more than an empty hole, its
reconstruction stalled by lingering negotiations between competing parties, including the
Port Authority, developer Larry Silverstein and New York City.
But while the sluggish pace of redevelopment of the World Trade Center site has
dominated the headlines, the surrounding district of [Lower Manhattan — roughly defined
as the area below Chambers Street flanked by the East and Hudson Rivers — is
experiencing a residential and commercial real estate boom.]
Tiffany is not the only company looking to cash in on that trend. BMW and luxury
retailers Hermes and Hickey Freeman have all opened or announced plans to open retail
stores in New York’s financial district in recent months.
“With all the competing pressures trying to influence the redevelopment of the World
Trade Center site, I think its renewal is going to be more complex and lengthy because
for many people it is a sacred place,” said Mitchell L. Moss, the Henry Hart Rice Professor
of Urban Policy and Planning at the New York University’s Robert F. Wagner Graduate
School of Public Service.
“What’s striking about Lower Manhattan is the area around the World Trade Center site,”
Mitchell added. “It has been going through a remarkable transformation ever since
September 2001. We are seeing new investment in schools, parks and housing, and the
area is emerging as one of the great new neighborhoods of New York City.”
A slice of real estate known for years as the city’s center of business and government and
the world’s center for investments and banking, Lower Manhattan slipped from third to
fourth place in the rankings of biggest U.S. central business districts in the aftermath of
the Sept. 11 attacks, as the destruction of the World Trade Center took away millions of
square feet of office space.
Today, Lower Manhattan is the fastest-growing residential neighborhood in Manhattan,
with new apartments being built in the buildings of former Wall Street residents like JP
Morgan and Goldman Sachs. At the same time, surging rents in Midtown and other parts
of New York City are driving an eclectic group of businesses to set up residence in the
once financially-focused neighborhood.
The growth in residential property has its roots in the 1990s when, faced with the exodus
of financial services companies from the Lower Manhattan district for Midtown and New
Jersey, New York City’s government put in place a series of incentives to encourage
developers to convert commercial spaces into residential properties out of concern that
occupancy rates in the area would tumble.
Those incentives have since fruit. In the past five years housing stock in Lower
Manhattan has grown by 38 percent, according to the Downtown Alliance, a business
advocacy group for the Lower Manhattan area. At least six new residential buildings are
slated to open in the next several months — attracting an expected 8,200 new residents
to Lower Manhattan.
A lack of available space and soaring rents in the tight Midtown market, where in the last
few years commercial rents have risen above $100 a square foot a year, are driving a
commercial real estate boom as an increasing number of businesses consider locating in
Lower Manhattan.
Several high-profile tenants moving their office space to the downtown area also have
spurred interest in Lower Manhattan. Goldman Sachs is building a new, 43-floor
headquarters within blocks of where the World Trade Center once stood. Morgan Stanley
recently signed a lease to rent additional space at 1 New York Plaza near Battery Park.
(“As long as office space is less expensive than Midtown people will move to lower
Manhattan for business, and there’s remarkable growth in housing,”) said Moss. “I think
Lower Manhattan is going to be one of the most exciting parts of New York City over the
next five years because it will have the benefits of a rebuilt infrastructure and housing,
and also the great waterfront access no other area of the city has.”
Before the Sept. 11 attacks, the office vacancy rate in Lower Manhattan was just 7.7
percent, according to data from commercial real estate firm Colliers ABR. Since topping
out in August 2002 at 15.2 percent, it has fallen steadily to its current level of 11.4
percent.
“The commercial real estate space is tightening up a lot,” said Robert Sammons, research
director at Colliers ABR. Moody's Investor Service recently signed a lease for some
600,000 square feet of developer Larry Silverstein’s 7 World Trade Center — a building
that was rebuilt on the site of one that collapsed on Sept. 11. Moody's move likely will
pull the area’s office vacancy rate below 10 percent for the first time since the terrorist
attacks.
Rightward (upward shift) of the demand curve.
Lower Manhattan Real Estate market.
Buyer expectations and tastes & preferences have changed.
Sellers have lowered real estate prices to try to lure people back.this is a movement
down the demand curve, while an upward shift will cause higher prices. See the
above table.
Price and Quantity both fall.
http://msnbc.msn.com/id/14684078/
September 11, 2006
GRADE: 65%
Ec 2100-Tansey
July 17, 2016
ASSIGNMENT 4 VERTICAL STRUCTURE
(Due nov 1 for MW class, and due Nov 2 for TTh class)
EC
L.O.
#
This assignment will help you to:
1
Demonstrate written communication skills by articulating and supporting ideas using
appropriate economic terminology
2
Develop the capability for studying and turning in assignments PAPERLESSLY.
5
Acquire the habit of reading quality media often and critically
7
Collect and analyze data on markets and industries.
8
Analyze price and output decisions for the eight market types using competitive analysis
and an understanding of vertical relationships among markets.
14
Use elementary microeconomic theory and models to understand buyer and seller
behavior in both the product and resource market.
16
Apply microeconomic theory and models to current events.
18
Analyze various industry structures and evaluate their effects.
Find your own article (to be done individually) with which to construct a supply chain
around a market which is threatened by an event reported in the article. ALL ARTICLES
MUST HAVE APPEARED IN THE MEDIA AFTER THE FIRST DAY OF CLASS
DURING THIS SEMESTER.). After choosing the event, organize your paper according
to the following outline:
A.
On the answer sheet (see below ((you can lift that right off these instructions and
put it into Word Perfect OR powerpoint)) ) set up the supply chain that will
show how your market is threatened by the event you have chosen.
(a) Carry the supply chain all the way down to the consumer and all the way
back to the original resource (land, labor, or capital). You should be able to
trace one product or service through the whole chain. Each additional market in
the vertical chain will add another participant. Circle the names or description of
each of these participants or markets that you can find in the article.
(b) There should be at least three participants; (i) the seller in the first market,
(ii) the buyer in the first market who is also the seller in the second market, and
(iii) the buyer in the second market. Who pays the money should determine the
buyer and who provides the good or service in a transaction should be
considered the seller. Each additional market in the supply chain will add
another participant.
(c) Each of the participants must take title to the good or service and each
market must have a buyer and seller who make an arm's length transaction.
BI.
In the mounted article you turn in UNDERLINE (not more than a sentence)
mention of the one single event that affects the entire supply chain.
(a)
In the market where the event first has its impact, circle the letter of the
appropriate shift on the answer sheet:
"A" represents a leftward (upward) shift in supply.
"B" represents a rightward (downward) shift in supply.
C.
"C" represents a leftward (downward) shift in demand.
"D" represents a rightward (upward) shift in demand.
(even if a single event affects several markets, define the event narrowly
enough to have its initial impact in only one market- remember ceteris
paribus!!! Sometimes, if the initial event involves a specific participant
in your chain there may be two markets initially impacted when the
participant is both a buyer in one market and a seller in the immediate
downstream market.)
(b)
To indicate the vertical impacts of the initial event, place "X"'s on the
answer sheet over the appropriate letter in the rest of the markets in your
supply chain. These X's should be placed in accordance with the rules
for shifts of derived demand and supply shifts due to changes in supply
determinants (i.e. resource prices and availability). Every market must
have a shift that is circled or have an X.
On your answer sheet describe each market as monopoly, oligopoly,
monopolistic competition, perfect competition, monopsony, oligopsony,
bilateral monopoly, or bilateral oligopoly. Support your description first by
deciding:
(a)
What aggregation you are examining? Industry? Product? Product line?
Generally this is implied by the name of the item in your study.
(b)
What is the size of the market? Decide if it is international (“I”),
national (“N”), regional (“R”), statewide, or local (“L”) and circle the
appropriate category on the answer sheet. Pertinent evidence includes
the amount and distance in which goods are shipped, the extent of
advertising (national T.V.? Local T.V.? Radio? National newspaper?
local newspaper? etc.), mobility of buyers, availability and economics of
transport, information on the distance between competing firms, and the
location of firms. Generally try to pick the widest market boundaries
that evidence can possibly support. Circle the letter of the appropriate
market size on the answer sheet
(c)
Is there product differentiation? Circle “Y” if there is and “N” if there
isn’t. This determines whether there is monopolistic competition or
perfect competition for a competitive market.
(d)
How many buyers and sellers there are in the market area? Circle on the
answer sheet “m” if there are many, “f” if there are few, and “1” if there
is only one firm in the market place. Do this for both the buyers and
sellers in a market. Here's a table to keep it clear:
Number of:
Buyers
Sellers
Monopoly
Many
One
Oligopoly
Many
Few
Competition
Many
Many
Monop
sony
One
Many
Oligopsony
Few
Many
Bilateral
Monopoly
One
One
Bilateral
Oligopoly
One/few
One/few
Your article must have a citation (page, date, title of news source), must be sent
electronically from the Wall Street Journal and must be neat.
There is an example of this assignment at the website cte.rockhurst.edu/tanseym
Participants
Product
(m=many,f=few,1=one) Type of Market SHIFTS OF:
Differentiation SELLERS BUYERS (eg. Monopoly, SUPPLY DEMAND
competition,etc) Left Right Left Right
I=international,N=national, (Y= yes, N=no)
R=regional, L=local
Seller
Markets
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Circle one for each
market
Circle One Circle
One
Circle
One
Write down
one market
Type
Circle One of the
four possibilities
ALL ARTICLES MUST HAVE APPEARED IN THE MEDIA AFTER THE FIRST DAY
OF CLASS DURING THIS SEMESTER. Turn in for this assignment the word file
containing the assignment. It should be entitled “law07slastnameAssn04” and send it
with the subject line under the same name in WEBCT.
EXAMPLE: (find Example at cte.rockhurst.edu/tanseym at Ec 2001 under “Hw #4
Examples”
Student 4
FedEx to Raise Air-Cargo Rates by 5.5%
By COREY DADE
November 4, 2006; Page A3
FedEx Corp. said it plans to increase rates on air shipments by 5.5% on Jan. 1,
reflecting the delivery company's expectation of continued strong volume growth,
particularly outside the U.S.
The move matches the rate increase imposed at the start of 2006, which was the
largest percentage jump in nearly a decade. FedEx, of Memphis, Tenn., is the
titan of the air-freight industry, with an average of about 3.2 million packages a
day in its fiscal first quarter ended Aug. 31. That segment contributed 66% of
FedEx's overall revenue in the period, led by a 17% surge in international
revenue.
FedEx is expected to hold off on announcing its ground-delivery rates until after
rival United Parcel Service Inc. discloses its 2007 air and ground-shipment price
structure later this month. The two delivery companies typically mirror each other
in overall price and delivery speed.
In addition, starting Feb. 5, FedEx will follow UPS's lead by converting to a billing
system for ground shipments of "oversized" packages based on their
dimensional weight. Currently such deliveries, measuring three cubic feet or
larger, are priced on a schedule of flat rates. UPS, based in Atlanta, is shifting to
the cubic-weight model, used primarily in air cargo, on Jan. 1.
Some delivery customers have complained that their costs will soar as a result.
But has UPS has said some customers actually benefit from the more-accurate
measuring. UPS says less than 10% of its volume will be affected.
FedEx's decision to raise air-shipment rates by 5.5% for the second year in a row
is "a good sign that domestic parcel pricing remains firm and rational," William
Greene, a Morgan Stanley analyst, wrote in a note to clients. Large commercial
customers of FedEx and UPS typically negotiate significant discounts on the
carriers' list rates.
The increase is intended to partially offset a planned drop in the surcharge
FedEx levies on customers to help recover its fuel costs. FedEx plans to drop by
two percentage points its fuel surcharge, now at 12.5%. FedEx is essentially
tacking on those two percentage points to its overall rate increase.
Meanwhile, shipments sent to many addresses will rise even more in price as
FedEx extends its fuel surcharge to so-called accessorial fees charged on
residential and rural deliveries. The surcharge currently is levied only on the list
price of a shipment.
Such add-on fees have mushroomed in recent years, which FedEx and UPS
have said reflects their efforts to make up for the higher operating expense of
driving longer distances between delivery stops in rural and residential areas
compared to commercial districts. But some customers claim the surcharges are
being used to squeeze extra profit from many shipments.
FedEx's latest move is "a surcharge on top of a surcharge," said Doug Caldwell,
a package-delivery industry consultant.
In 4 p.m. composite New York Stock Exchange trading, FedEx shares slipped
two cents to $112.07. UPS fell 80 cents, or 1.1%, to $73.20.
Participants
Fed Ex Co.
Air Line Co.
Product
(m=many,f=few,1=one) Type of Market SHIFTS OF:
Differentiation SELLERS BUYERS (eg. Monopoly, SUPPLY DEMAND
competition,etc) Left Right Left Right
I=international,N=national, (Y= yes, N=no)
Monopolisti
R=regional, L=local
Seller
Markets
Buyer
Extent: I N R L
Seller
Consumer
Buyer
Extent: I N R L
A B C D
Y N
A B C D
Seller
Buyer
Extent: I N R L
f 1 m f 1 c___________
Competition
Monopolisti
m f 1 m f 1 c___________
Competition
Monopolisti
c
m f 1 m f 1 ___________
Competition
Y Nm
Y N
A B C D
Seller
Buyer
Extent: I N R L
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Y Nm
f 1 m f 1 ___________
A B C D
Seller
Buyer
Extent: I N R L
Seller
Buyer
Extent: I N R L
Circle one for each
market
Circle One Circle
One
Circle
One
Write down
one market
Type
Circle One of the
four possibilities
zmar
This article deals with a monopolistic competition. We are dealing with a service
company that is providing the service of sending our mail out. The market is
international.
Here are the learning objectives that this assignment was geared to address. After
completing you should:





(/5%)Demonstrate written communication skills by articulating and
supporting ideas using appropriate economic terminology
(/5%)Develop the capability for studying and turning in assignments
PAPERLESSLY.
Evaluate the role and effectiveness of government in the economy
(/5%)Articulate differing value systems and their relevance to
different economic paradigms.
(/5%)Acquire the habit of reading quality media often and critically

(/25%)Analyze price and output decisions for the eight market types
using competitive analysis and an understanding of vertical
relationships among markets.
 (/5%)Effectively grasp appropriate economic methodology.
 (15/25%)Use elementary microeconomic theory and models to
understand buyer and seller behavior in both the product and
resource market. You are not showing the secondary ripple effects
here with an “X” through the vertical chain. Can’t tell where the
initial market effect is here.
 Apply microeconomic theory and models to current events.
 (20%/30%)Analyze various industry structures and evaluate their
effects. You are not showing the markets in your vertical chain, just
the participants, but it is the markets that you classify.
GRADE:= 80%
Thanks for putting the effort into looking for the articles in the Wall Street Journal.
Hopefully you will find that reading actively for the underlying structures of
markets and the failures of both markets and government will help you actively
read- read with a question in mind- that will allow you to remember better and to
discuss with greater interest what you are seeing everyday in the paper. It is helpful
to know that there is a framework from Economics with which to discuss policy
issues which are the subject of the next assignment.
Student 5
Google to
newspapers
help
firms
buy
ads
in
Test is a bid to extend the No. 1 search engine's business into
traditional media.
November 6 2006: 7:21 AM EST
SAN FRANCISCO (Reuters) -- Google Inc. is set to begin helping customers buy
advertisements in 50 U.S. newspapers in a test of how the Web search leader
can extend its business into offline media, the company said on Sunday.
Google (up $1.89 to $471.80, Charts) said it has invited more than 100
advertisers already buying ads through its Web marketing system to join a threemonth test of a new service that places ads in daily papers including the New
York Times and Washington Post.
If the trial is successful, Google could extend the program to hundreds of
thousands of its online advertising customers, offering newspapers a broad new
sales channel that could help offset an ongoing decline in classified print
advertising.
"For advertisers, it gives them access to a network of newspapers through an
online interface and the ability to potentially reach a new customer base," Google
spokesman Michael Mayzel said in response to questions via e-mail.
A year ago, Google, of Mountain View, California, began an earlier test in which it
started selling print advertising in a handful of magazines, including PC
Magazine. But demand for the service was slow to take off, executives said in
May.
Mayzel contrasted the earlier magazine program to the current newspaper test
by saying that, "This test is not an auction and we are not buying and reselling ad
space."
In effect, Google is giving greater control over how ad sales are made.
Advertisers log into the Google AdWords system and select newspapers and
available ad space, then upload the advertising artwork. But newspaper
publishers retain creative and financial control over whether to approve or reject
bids.
The advertisements will appear in 50 metropolitan newspapers, including the
Boston Globe, Seattle Times, the Philadelphia Inquirer and Chicago Tribune,
along with papers in the Gannett Co. Inc (down $0.23 to $58.02, Charts).
newspaper chain, the Google spokesman said.
Print advertising joins efforts by Google to expand into radio and video ads,
allowing it to move beyond its Web-search marketing business that delivers payper-click text ads on its own site and others and accounts for the bulk of its
revenue.
Google already offers click-to-play video ads through Web sites in its ad affiliate
network. It has said it plans to start a public test of its Google Audio Ads that
brokers ads on radio stations by the end of this year, Mayzel said.
During the test program, Google's services will be free, but it plans on taking a
sales commission eventually. "In the future, we will set up a revenue share model
where the majority of the ad revenue will go to the publisher," he said.
Newspaper companies such as Gannett, The Tribune Company (up $0.01 to
$32.27, Charts) and the New York Times Company (up $0.10 to $23.55, Charts)
have seen declining newsstand and subscriptions sales along with falling
classified advertising revenue hit their bottom line and cloud the future of the print
newspaper industry.
http://money.cnn.com/2006/11/06/technology/google_ads.reut/index.htm?postver
sion=2006110607
11/6/2006 4:27 PM
Here are the learning objectives that this assignment was geared to address. After
completing you should:









(/5%)Demonstrate written communication skills by articulating and
supporting ideas using appropriate economic terminology
(/5%)Develop the capability for studying and turning in assignments
PAPERLESSLY.
Evaluate the role and effectiveness of government in the economy
(/5%)Articulate differing value systems and their relevance to
different economic paradigms.
(/5%)Acquire the habit of reading quality media often and critically
(/25%)Analyze price and output decisions for the eight market types
using competitive analysis and an understanding of vertical
relationships among markets.
(/5%)Effectively grasp appropriate economic methodology.
(/25%)Use elementary microeconomic theory and models to
understand buyer and seller behavior in both the product and
resource market. Terrific job here!!
Apply microeconomic theory and models to current events.

(/30%)Analyze various industry structures and evaluate their effects.
You are not showing the markets in your vertical chain, just the
participants, but it is the markets that you classify.
GRADE:= 100% Perfect paper. Wonderful vertical chain!!! You have figured this
out and done a terrific job. Thanks for your effort.
Participants
Labor
Product
(m=many,f=few,1=one) Type of Market SHIFTS OF:
Differentiation SELLERS BUYERS (eg. Monopoly, SUPPLY DEMAND
competition,etc) Left Right Left Right
I=international,N=national, (Y= yes, N=no)
R=regional, L=local
Seller
Markets
Labor Market
Google
Newspapers
Ad Agencies
Firms
Consumers
Buyer
Extent: I N R L
Y Nm
Seller
Web Marketing
Buyer
Extent: I N R L
Seller
Ad Space
Buyer
Extent: I N R L
Seller
Advertising
Buyer
Extent: I N R L
Seller
Services
Buyer
Extent: I N R L
Oligopoly
f 1 m f 1 ___________
A B C D
Bilateral
1 oligopoly
___________ A B C D
Y Nm
f 1 m f
Y Nm
f 1 m f 1 ___________
Y Nm
CompA
f 1 m f 1 Mon.
___________
Y Nm
f 1 m f 1 ___________
Y Nm
f 1 m f 1 ___________
Monopolistic
A B C D
competition
B C D
Mon. CompA B C D
Seller
Buyer
Extent: I N R L
Circle one for each
market
Circle One Circle
One
Circle
One
Write down
one market
Type
A B C D
Circle One of the
four possibilities
Ec 2100-Tansey
July 17, 2016
ASSIGNMENT 5 Market and Government Failure in the Media
(Due Nov 13 for MW class and Nov 14 for TTh class)
The learning objectives for this assignment should allow you to:
 Have the capability to present or evaluate arguments for and against government
intervention in international markets.
 Discuss and explicate basic issues concerning government intervention, emerging
global technologies, and ethics in leading organizations in different cultures.
 Reinforce fundamental concepts of supply and demand within international
markets.
 Reason through and identify the efficiency and ethical dimension of problems in
global business.
 Demonstrate an understanding of competitive advantage.
 Evaluate the current international economic position of the U.S.
For each of four DIFFERENT types of market failure (use the “market failure and
government intervention” handout for the complete list of market failures), find an example
from the media (articles must be dated later than the beginning of the semester) which
mentions the market failure, a form of government intervention to correct the market failure,
and an example of government failure. For each of the four articles:
1.
Underline and color in bold blue letters(no more than one sentence) evidence of
the market failure.
2.
Circle and show in bold, red letters (no more than one example) of the
government intervention designed to correct the market failure.
3.
[Place brackets and show in bold, green letters] an example of the government
failure that results from the government intervention. (For discussion of government
failure you can get more information from the previously mentioned handout)
4.
In a page or less for each type of market failure, subjectively weigh the costs and/or
benefits of government involvement to correct the market failure and make a policy
recommendation about the most desirable form of government involvement (or noninvolvement (no expletives)).
5.
Describe which kind of study you are performing in your analysis (eg. Regulatory
impact, fiscal impact, cost benefit, cost effectiveness) and justify your answer.
Enter the citation (page, date, title of news source) below each of the articles. You
should have four articles in all- each representing a different market failure. ALL
ARTICLES MUST HAVE APPEARED IN THE MEDIA AFTER THE FIRST DAY OF
CLASS DURING THIS SEMESTER. Turn in for this assignment the word file
containing the assignment. It should be entitled “law07slastnameAssn05” and send it
with the subject line under the same name in WEBCT.
EXAMPLE: (find Example at cte.rockhurst.edu/tanseym at Ec 2001 under “Hw #5
Examples”
Student 6
Student 7
Student 8
Student 9
Student 10
Student 1
Student 2
Student 3
Student 4
Student 5
Student 6
Student 7
Student 8
Student 9
Student 10