1. What is Avon’s position in the market?
2. How would you compare Avon’s new EAS with the other types already in the
3. What principle does economic theory suggest Avon should use in setting the price?
4. What price should Avon charge? (Your recommendation)
For simplicity’s sake, assume returns on investment and accounts receivables are
included in manufacturing costs.
Case Memos and Discussions: This course is built around a series of six case studies that address both public policy analysis and private sector
management decisions. Each of these case studies represents a real situation and gives you the opportunity to apply some economic principles and
concepts as well as other forms of reasoning. You will be expected to analyze each of the six cases and to be prepared to discuss each of the
cases in detail in class. All students will be expected to thoughtfully participate in the discussion. In addition, each student will prepare a
one page case memorandum for each of the six cases.
The case memorandums should be typed, double-spaced, with normal margins, pitch, etc. and should not exceed one page. Additional pages may be
attached that contain appendices, tables, calculations, etc. However, the one page memorandum must be able to “stand on its
4You are encouraged to work with other members of the class to discuss and analyze the cases. However, each student should prepare her or his
case memorandum individually and must fully understand the process used to arrive at the recommendation. When you are analyzing the case studies
and preparing your case memorandums, you should keep the following in mind. First, there will be guidance on how to analyze each of the case
studies provided on Canvas. 2 Second, the cases in the TIS reader describe real situations in which a public or private decision maker must sift
through often voluminous information in order to determine which course of action is most appropriate. Typically the exhibits contain
as much (or more) important information as the text.
Your task, much like that of a real world policy maker, is to decide what information in the case is pertinent. In many situations some of the
information provided is superfluous or contradictory. Each case is self-contained meaning no outside reading or research should be required to
supplement the information provided. In addition, while it is usually healthy to be skeptical, if you encounter information in the case that you
doubt, you should assume all the material is correct. Third, each case study is different and there is no fail-safe approach to tackling one.
Nevertheless, there are some basic questions you may find useful to ask (and attempt to answer):
Who are the principal actors in the case?
What are the long run goals of each?
What are the short run incentives of each?
How is each rewarded?
What are the options available?
What is the decision to be made?
Are the apparent constraints really constraints or might some be loosened?
Are the long run alternatives different than those in the short run?
What are others likely to do in response to each alternative?
What are the advantages and disadvantages of each option?
Which are quantifiable?
What bounds can you put on those that are not quantifiable?
Can the problem be broken into several simpler problems?
Unlike problems in a problem set, there is no unique “right” answer. Usually there are several different approaches to solving the problem. Some
of these differing approaches may be equally valid while others may be less valid.
2 Be sure to “unhide” yourself on Oncourse so that you can gain access to this and other information on this instructional tool.
5 Fourth, there is a standard format you should use when preparing your memorandums. The first section should contain your recommendation. The
second section should contain the three strongest arguments supporting your recommendation. The third section should contain the three strongest
arguments against your recommendation. And, remember, the case memorandums must be double-spaced and must be no more than one page in length.
Fifth, you should be aware of some common mistakes that are made when analyzing cases:
• One common mistake is to make recommendations that are too general. The more specific the recommendation the easier it will be to see the
advantages and disadvantages of the chosen course of action.
• A second common mistake is to make recommendations or statements that are not supported by facts provided in the case.
• A third common mistake is to believe analysis is not necessary to make a recommendation. Remember the purpose of the case studies is to apply
policy analysis tools and concepts to policy issues. All cases will involve using some economic
principles and most will require data manipulation; analysis of a case is
INCOMPLETE without these components.
• Finally, don’t forget what you are trying to accomplish with the memorandum. Do not include extraneous sentences or ideas. Review each
sentence and ask “does this sentence add value to my argument?” If it fails to contribute anything to the recommendation you are making and the
rationale for the recommendation, purge it immediately!