Case study – Baltimore Newspaper In 2006, the average price for a daily edition of a Baltimore newspaper was $0.50. In 2007, the average price had risen to $0.75. Three different analysts have three different explanations for the higher equilibrium price. Analyst 1 : The higher price for Baltimore newspaper is good news because it means the population is better informed about public issues. These data clearly show that the citizens of Baltimore have a new, increased regard for newspapers. Analyst 2 : The higher price for Baltimore is bad news for the citizens. There higher cost of paper, ink and distribution reflected in these higher prices will further diminish the population’s awareness of public issues. Analyst 3: The higher price for Baltimore newspapers is an unfortunate result of newspapers trying to make money as many consumers have turned to the Internet to access news coverage for free. Required: 1. Do all of the three explanations make sense to you on what you have learned about economic principles? 2. For the ones that do make sense, apply the relevant principles of demand and supply and illustrate them by graphs. Start each graph with a supply and demand line, and label S1, D1, P eq1, and Q eq1. Write what happened to Price Equilibrium (Increase, Decrease) and Quantity Equilibrium (Increase, Decrease). As necessary, label S2, D2, P eq2, and Q eq2 and use arrows to show shif
Case study – Baltimore Newspaper
In 2006, the average price for a daily edition of a Baltimore newspaper was $0.50. In 2007, the average price had risen to $0.75. Three different analysts have three different explanations for the higher
Analyst 1 : The higher price for Baltimore newspaper is good news because it means the population is better informed about public issues. These data clearly show that the citizens of Baltimore have a new, increased regard for newspapers.
Analyst 2 : The higher price for Baltimore is bad news for the citizens. There higher cost of paper, ink and distribution reflected in these higher prices will further diminish the population’s awareness of public issues.
Analyst 3: The higher price for Baltimore newspapers is an unfortunate result of newspapers trying to make money as many consumers have turned to the Internet to access news coverage for free.
Required:
1. Do all of the three explanations make sense to you on what you have learned about economic principles?
2. For the ones that do make sense, apply the relevant principles of demand and supply and illustrate them by graphs. Start each graph with a
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
