Merger

In 2002, the Atlanta Journal and the Atlanta Constitution, once fierce competitors, merged to become the Atlanta Journal-Constitution, the only remaining daily newspaper in the city.
a. Before the merger, each of the separate newspapers was losing about $10 million per year. What forecast would you make for the merged firm’s profits? Explain.
b. Before the merger, each newspaper cut advertising rates substantially. What explanation might there be for such a strategy? After the merger, what do you think happened to the Atlanta Journal-Constitution’s advertising rates?
c. What do you think the increased availability of online news sources has had on advertising rates?
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Over the last 30 year in the US, the real price of a college education (i.e. after adjusting for inflation) has increased by almost 70 percent. Over the same period, an increasing number of high school graduates have sought a college education. (Nationwide college enrollments almost doubled over this period.) While faculty salaries have barely kept pace with inflation, administrative staffing (and expenditures) and capital costs have increased significantly. In addition, government support to universities (particularly research funding) has been cut.

a. College enrollments increased at the same time that average tuition rose dramatically. Does this contradict the law of downward-sloping demand? Explain briefly.

b. Use supply and demand curves (or shifts therein) to explain the dramatic rise in the price of a college education.

– Use at-least 1 credible reference