PRINCIPLES OF MICROECONOMICS 8TH EDITION

A case study in this chapter describes how a boyfriend can signal his love to a girlfriend by giving an appropriate gift. Do you think saying "I love you" can also serve as a signal? why or why not?

2. According to two case studies of microeconomics. Use each paragraph to compare specific micro economic concepts/principles which are common to both of the events. Analyze their outcomes and contrast between them

1. New Steak on the Block

Steakhouses and Butchers Serve Up Different Cuts; Chuck Becomes a Flat Iron FiletBy SARAH NASSAUER Steakhouses are retooling menus to add different cuts of beef and redesigning their interiors to welcome more than just those celebrating big deals or milestone events. Sarah Nassauer has details on Lunch Break. Photo: Ramsay de Give for The Wall Street Journal.It's a rare moment of change for a tried-and-true staple: the steakhouse and steak itself.Steakhouses are offering new cuts, sometimes with chic-sounding, unfamiliar names (a "rib cap," anyone?). Some are retooling menus to add prices palatable to more diners. And the rustic dcorof the traditional steakhouse is being replaced with a sleeker style to attract a clientele beyond business meetings and celebrations. View Interactive Record-high beef prices and evolving culinary trends are pushing midtier chains like LongHorn Steakhouse and grocery giants like Supervalu to offer new cuts.To signal it is a new style of a steakhouse, Gordon Ramsay Steak, which opened this month in Las Vegas, has an interior intended to evoke "cool Britannia," says Gordon Ramsay, the chef and television star of his first foray into sin city. "We are all using the same product [beef] and there is only so much you can do." His eatery, with its Union Jack flag on the ceiling, high-energy music, and high-quality meat cuts combined with British comfort food, is a modern riff on the steakhouse experience, he says.Enlarge Image Rouse PhotographyRestaurateur Gordon Ramsay's first Las Vegas eatery opened this month. Its menu and dcor are intended as a modern riff on the traditional steakhouse.Enlarge Image Ramsay de Give for The Wall Street JournalExecutive chef and partner Michael Anthony says it was an initial challenge to explain to diners why some old standard steak cuts were replaced by dishes using other beef cuts.Enlarge Image Ramsay de Give for The Wall Street JournalHalf a cow, or about 900 pounds of beef, is delivered to New York's Gramercy Tavern each week as part of its 'nose to tail' philosophy. Only about 100 pounds of that is butchered into premium steak cuts.It should be a terrible time for steakhouses. People are eating out lessand being more frugal when they do. Average beef prices are hovering around an all-time high of about $5 per pound. Instead, sales at steak-themed restaurants with waiters grew 3.5% in 2011, according to Technomic Inc., a restaurant research and consulting firm. Sales at all restaurants with waiters grew 1.8%. Over the past year LongHorn Steakhouse, one of the largest U.S. steakhouse chains by sales, added a 6-ounce sirloin steak for $12 and two versions of a grilled flat-iron steak for about $13. The flat iron, tender but relatively inexpensive, is the most common new cut in restaurants and grocery stores. It is filleted out of the chuck or shoulder to avoid a tendon.People usually expect to splurge when they choose a steakhouse. While guests want an option under $15, "they don't want a $9 or $10 steak," says Kurt Hankins, senior vice president of culinary and beverage at LongHorn Steakhouse. "It's too little." Heather Cartonia, a 24-year-old clinic director at a medical spa who lives in Manhattan, recently spent her birthday dinner at a branch of STK, a six-restaurant steakhouse chain that markets itself as club-like, female friendly, and "sexy." A DJ blasts music most nights. The menu offers small, medium, and large steaks from a filet medallion to a "cowboy rib steak." "I feel like a traditional steakhouse is someplace you would go with your parents," she says.TXRH +0.66% Texas Roadhouse, TXRH +0.66% the second-largest U.S. steak chain after Outback Steakhouse, added a $21 bone-in rib eye this year and is rolling out a 23-ounce porterhouse to its 377 restaurants. Its new menu, introduced in March, has 2% higher prices to offset rising costs, says a spokesman. An Outback spokeswoman declined to comment due to a quiet period before a planned initial public offering of a parent, Bloomin' Brands. Steakhouses have higher check averages than other styles of restaurants because they attract large groups and tend to sell more sides, says Michael Mina, a chef whose high-end restaurants stretch from steakhouses to seafood restaurants. High-end chefs are elevating the concept of the steakhouse to fit with other culinary trends like seasonal organic ingredients and signature dishes, says Damian Mogavero, founder and chief executive of Avery, a firm that collects a check and other data to advise restaurants on how to improve service. "This is the foodie generation and steakhouses are basically adapting to this," he says. Beef All AroundWays that New York's high-end Gramercy Tavern uses the whole cow enlarge Image .Most of the beef Americans eat is ground meat, not the high-end steak. About 23% of restaurant lunches and 16% of dinners included a hamburger in the U.S., according to NPD Group, a consumer market-research firm. To entice consumers to stick with beef in the face of high prices, the beef industry is marketing "speakable" cuts. "Our goal is to dry heat cook," over a grill or in a skillet, says Dave Zino, executive chef for the Beef Checkoff, an industry organization that has funded research to identify cuts of beef that can be priced between high-end steak and inexpensive ground beef. "We want to address the fact that consumers are time starved," and might not take the time to slow cook a tough piece of meat by roasting, he says. In the past decade, the organization has pushed the flat iron (an "eight-year overnight success story," quips Mr. Zino), and lesser-known cuts like the Denver steak, which is cut from a part of the shoulder usually used for "hunk and chunk" like a roast or to make ground beef in the U.S.Supervalu SVU +1.66% is introducing midprice cuts of meat that are already sold in one region into other areas. The tri-tip, cut from the sirloin, an easily grilled cut often found in California supermarkets is being rolled out in its Minneapolis Cub Foods. Meijer, a Midwestern chain that sells groceries and home goods, will start butchering its top sirloin differently to offer the less expensive "culotte steak," which is good for grilling, says Jerry Suter, vice president of perishables for the company. The culotte is cut from the top sirloin. Meijer now instead cuts it into two steaks: the culotte and a "filet of sirloin." People discover new cuts of beef at restaurants, then look for them at supermarkets, grocers say. Even then, it's risky to introduce new cuts. "The feedback we have gotten with customers is there is enough confusion already with their familiar cuts," says Steve Brooks, director of beef at Supervalu. Another complication: If beef processors aren't cutting large amounts of the new cut, big grocers won't carry them, says Mark Van Buskirk, vice president of meat merchandising for Kroger, KR +0.99% the largest traditional grocer in the U.S. and one of the first to sell flat irons. "It's like boneless, skinless chicken breast. They just expect that to be there every time," he says.Beef cuts have official names approved by the U.S. Department of Agriculture. Compliance is voluntary, so shoppers often see what the industry calls "fanciful" names like Delmonico.The Beef Checkoff spent eight months researching fanciful names for the new cuts it wanted to market, says a spokeswoman. "Denver steak" won out over "Tavern steak" and "Prairie steak."Very high-end restaurants like Gramercy Tavern in New York are embracing "nose to tail" cooking, in which almost every part of an animal is eaten. These chefs like to order whole animals to control the quality and ethics of their purchase. Enlarge Image Ramsay de Give for The Wall Street JournalMichael Anthony, executive chef and partner at New York's Gramercy Tavern.Each week 900 pounds, about half a cow, is delivered to Gramercy Tavern. Its challenge is making traditionally plebeian parts of the animal acceptable to dinners accustomed to ordering filet mignon, says executive chef and partner Michael Anthony. A carcass has about 38 portions of those premium cuts. Beyond those "we are sitting on another 800 pounds of product," says Mr. Anthony. Finely cut eye round becomes beef carpaccio. Shanks and shoulders become braised beef ravioli. On the more casual "Tavern" side of the restaurant, diners can order meatball with fontina or kielbasa. "I even put a hamburger on the menu," he says.At first, some customers complained about the loss of their favorite files. "I made the mistake of replacing a long-time favorite with out explaining the philosophical change," says Mr. Anthony. Now waiters are versed at telling customers the story behind each dish

2. Beef Stroganoff for Your Dog?

Pet Food Goes Upscale Appealing to humans helps pet-food makers charge more, offsetting a slide in sales; $10 a day to feed LabradorPet-food companies are selling dishes, such as meat lasagna and beef stroganoff, that look and smell like human food. Photo: F. Martin Ramin/The Wall Street Journal/Styling Allison Scott/The Wall Street Journal By Saabira ChaudhuriUpdated May 8, 2017 Mars Inc. set a key goal for its new line of wet dog food: Make it look less like wet dog food.Instead of the usual brownish mush, the world's biggest pet-food company by sales rolled out recognizable pot roast with spring vegetables, beef stroganoff, and meat lasagna under its Cesar Home Delights line across the U.S. in 2015. Home visits and consumer panels told Mars some people felt guilty feeding their pets the same food every day and were more likely to buy pet food that reminded them of their own meals."The focus is to deliver dishes that literally look and smell like human food but are nutritionally balanced to be right for a pet," said Chris Modzelewski, North America head of specialty pet care for Mars.Two years later, Home Delights generates $100 million in annual sales. It is one of a widening array of lines incorporating human-food trends Mars and rivalNestl SANSRGY -0.26% which together dominate 48% of the $75 billion global pet-food marketare creating. Appealing to human beings is helping the industry charge more to counter declining volumes: North American pet-food volumes fell 0.8% last year, according to Euromonitor, but revenue climbed 4%."Just like people spend more money on their own good nutrition, they also want to do this for their pets," Nestl Chief Executive Mark Schneider said in February.Pet owners in developed markets are cultivating stronger emotional bonds with their dogs and cats, motivated by later marriages, smaller families and elevated divorce rates, according to toEuromonitor. In 2016, the U.S.'s 84.6 million pet-owning households spent $28.2 billion on pet food, up 23% from a year earlier, according to the American Pet Products Association. That translates into $333 spent per household last year.Nicole Latza, a school-district clerk in West Seneca, N.Y., feeds her two cats a variety of FancyFeast Medley's canned food from Nestl's Purina unit, along with some dry food and food designed to clean their teeth. She said she has never tallied up the cost."We don't care what it costs for our animals since we want to get them something that's good for them and that they enjoy," Ms. Latza said. Fancy Feast Medleys comes in flavors such as wild salmon Primavera with garden veggies and greens. A 24-pack of 3-ounce cans costs $19.20 on Petco.com. Purina's Fancy Feast Medleys pt for cats includes three colors to appeal to owners, although cats themselves are partly colorblind. Photo: Nestl Purina The Medleys line includes a pt for cats, launched last year, which contains whole pieces of carrots, tomatoes, and spinach. It sells for 85 cents a can, compared with regular Fancy Feast cans that are 20 cents cheaper.A workshop with Purina Chef Amanda Hassnerwho previously fed humans at restaurants including Sans Souci at the Renaissance Cleveland Hotel and Il Fornaio in San Franciscohelped the Fancy Feast development team decide to include three colors in the new cat pt, even though cats are partly colorblind. Ms. Hassner noted that people respond well to seeing one primary color and two complementary colors."Dogs and cats don't push the grocery cart down the aisle, their owners do," said Dan Smith, research-and-development vice president at Purina.As people seek to connect with their pets, revenue from treats has risen. High-price pet foods labeled all-natural and grain-freeand ones that incorporate ingredients such as blueberries and sweet potatoesare also growing faster than more mainstream kibble because people think they are healthier. Mars marketers used photos of Cesar Home Delights dog food in crockery pots for advertisements, aiming to evoke home-cooked meals. Photo: Mars Inc. "People think that what is good for them is good for their pets," said Bernard Meunier, Purina's CEO for Europe, the Middle East, and Africa. "There is some truth to that and also not."Richard Hill, a professor at the University of Florida's College of Veterinary Medicine, says consumers focus more on ingredients than nutrients but the nutrients' origin often makes no difference to a pet's health. "There's a feeling if a substance has been through a chemical process it's more dangerous than one that hasn't been," he says. "But it's all marketing and there's no scientific basis for any of it."Natural products' share of U.S. pet food jumped to 18% in 2015 from 11% in 2011, according to data provided by Susquehanna Financial Group. Over that period, mainstream pet food's market share dropped to 67% from 74%."The big companies were not ready for that trend, so they've had to buy brands or come out with new brands or extensions," said Susquehanna analyst Pablo Zuanic.In 2014, Mars bought Iams, Natura and other pet-food brands from Procter & Gamble Co. for$2.9 billion. Nestl in 2015 bought natural and organic pet-food maker Merrick Pet Care, which owns limited-ingredient and grain-free pet-food brands. Also that year, J.M. Smucker Co. boughtBig Heart Pet Brands, owner of Milk-Bone dog treats and Meow Mix cat foods. Under the Merrick line, Nestl sells grain-free dog food in flavors such as Grammy's Pot Pie. Photo: F. Martin Ramin/ The Wall Street Under Merrick, Nestl sells grain-free dog food in flavors such as Grammy's Pot Pie, which includes chicken, red jacket new potatoes and red apples, and Thanksgiving Day Dinner which has turkey, sweet potatoes, green beans and Granny Smith apples. The food, which sells for roughly $2.50 per can, costs about $10 for the average Labrador a day.In the documents for its 2015 initial public offering, natural-pet-food company Blue Buffalo Pet Products Inc. said the trend toward the "humanization" of pets was the key driver of premium product sales and pet-food growth. Blue Buffalo, based in Wilton, Conn., reported a 12% rise in net sales for 2016, more than twice the 5.3% pet-care growth that Nestl reported.Mars's researchers took two years to create Home Delights, comparing the aroma and aesthetics of trial versions of the dog food against those of human ready meals from Campbell Soup Co. They sought out new suppliers for ingredients such as bow tie pasta, which Mars hadn'tpreviously used before. The food sells for about 98 cents per 100-gram tray at Walmart.com, with three trays recommended daily for small dogs. Advertising campaigns showing a meat lasagna read: "He'll have what you're having."Mars marketing director Denise Truelove chose to have the Home Delights line photographed in crockery pots for advertisements, evoking images of home-cooked family meals. "We wanted to break through and say the wet dog food you know today is very different," she said.