Academic journal article Journal of the International Academy for Case Studies

Speedy DSL Corporation

Academic journal article Journal of the International Academy for Case Studies

Speedy DSL Corporation

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns the pricing decision of a service firm, and the use of the appropriate economic model to analyze that decision. A comparison of price-elasticity and cross-elasticity of demand highlights the market structure in which the firm operates and thereby an understanding of how a price change will impact the firm's total profit. Secondary issues involve classifying the cost of the firm's business activities and allocating those costs by sales revenue.

The case has a difficulty level of three and is intended for use in junior-level courses. It can be covered in three hours, including a class presentation by a student team. The case requires a minimum of nine hours of outside preparation by students.

This case is designed for use in an upper-division, inter-disciplinary business course. The purpose of the course is to enable students to apply the knowledge they have gained in their lower-division, business core courses that include microeconomics, financial accounting, and managerial accounting. Specifically, the case incorporates the understanding of profit-maximizing pricing under monopoly and duopoly models of competition, how price and cross-elasticity of demand are interpreted, and how cost data can be organized for management decisions. …

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