Case Studies:
The case studies are 30% of your grade. There are two case studies.
Students work in teams.
The answers should be 2pages long, typed in an MS word document format. The page limit does not apply to cover page and references page. Your answers should demonstrate a solid comprehension of economic concepts you acquired in this class.
Cite articles and references related to your case study using the APA style formatting.
MBA 720 Summer I, 2024
CASE STUDY – I
Part A. Please review Consumers Fed Up with Food Costs are Ditching Big
Brands by Heather Haddon and Jesse Newman | May 5, 2024
A short summary of the article is provided below, you can find the full article by
accessing WSJ through library.
Summary: For three years following the Covid-19 pandemic, food companies raised
their prices sharply in order to cover rising costs. As a result, the fraction of
consumer income spent on food reached its highest level in three decades. But now
restaurant chains and food manufacturers are reporting sales decreases as
consumers refuse to pay prices that, in some cases, are a third higher than they
were prior to the pandemic.
Questions:
1. Draw and label a graph that depicts a linear demand curve (D) in the market
for chocolate chip cookies. Refer to your graph to explain the difference
between a change in the quantity demanded and a change in the demand for
chocolate chip cookies.
2. Draw a linear supply curve (S) that intersects the demand curve in the graph
you drew to answer the previous question. Show how an increase in the price
of cookie dough will affect the supply of chocolate chip cookies. Will the
change in supply cause a change in the demand or a change in the quantity
demanded for chocolate chip cookies?
Part B. Please review The True Cost of Megamergers in Healthcare: Higher
Prices by Melanie Evans | April 24, 2024
A short summary of the article is provided below, you can find the full article by
accessing WSJ through library.
Summary: Recently published research has found that prices of surgery, intensive
care and emergency room visits rise following hospital mergers. The price increases
have added over $200 million, on average, to national health spending. Premiums
have risen at the fastest rate in more than a decade.
1
Questions:
1. Draw and label two linear, downward-sloping demand curves. Label the
demand curve with the steeper slope D1 and the other demand curve D2.
Label the price and quantity at the intersection of the curves P1 and Q1.
Assume that price rises from P1 to P2. (I) For which demand curve is the
change in quantity demanded greater? (II) For this change in price which
demand curve is more elastic?
2. From the article: “Hospital mergers make the price pressures worse.” If a
merger between two hospitals makes “price pressures worse” would this
imply that the demand for medical services has become more or less elastic?
Explain.
3. From the article: “Hospitals say mergers create efficiencies and combine
resources to… improve quality. Operating costs drop by 4% -7% on average
at acquired hospitals after a deal…” Refer to the graph you drew to answer
the previous question to explain how a merger between two hospitals in
Gotham City could result in a decrease in the average cost of their services.
