BUSINESS ECONOMIC COURSE

Case Analysis : Why Do the Prices of Newspaper Rise?

Syndicate 3, YP 50 A
Nadya Firstyani M

29113374

Catra Novendia U

29113478

La Ode M. Idrus

29113483

Maisa Ulfah

29113487

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT
INSTITUT TEKNOLOGI BANDUNG
2014

Case Analysis : Why Do the Prices of Newspaper Rise?

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 of public issues.
Based on statement above, we conclude that analyst 1 blame the increase of newspapers
price to the awareness improvement of Baltimores citizen about newspaper. It means, the
citizen of Baltimore need newspaper more than before. The increase of this needs makes the
demands slope shifting to the right. The impact of this shifting are the increase of Quantity
demanded and the increase of the price. Because of this event, in the short-run there will be
shortage in supply of newspaper.

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Analyst 2: The higher price for Baltimore newspaper is bad news for the citizens of
Baltimore. The higher cost of paper, ink, and distribution reflected in these higher prices will
further diminish the populations awareness of public issues.
Based on statement above, we conclude that analyst 2 blame the increase of newspapers
price to an increased cost of newsprint. It means, production costs of newspaper to rise. The
increase of this needs makes the supply curve shifting to the left. The impact of this shifting
are the decrease of quantity demanded and the increase of the price. Because of this event, in
the short-run there will be an excess in supply because the demand will be decreased.

Analyst 3: The higher price for Baltimore newspaper is an unfortunate result of newspaper
trying to make money as many consumers have turned to the internet to access news
coverage for free.
Based on statement above, we conclude that analyst 3 blame free internet access as a
substitute for print media to an increased cost of newsprint. The decrease in the price of this
subtitute for print media should make the demand curve shifting to the left. It means, the
result should be lower price, not higher price. So this analyst isnt plausible.

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