MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Textbook Question
Chapter 7, Problem 20PAA
In 2006. the five leading suppliers of digital cameras in the United States were Canon. Sony, Kodak. Olympus. and Samsung. The combined market share of these five firms was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The own price elasticity for Canons cameras was -4.0 and the market
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In 2006, the five leading suppliers of digital cameras in the United States were Canon,
Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms
was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The
own price elasticity for Canon's cameras was –4.0 and the market elasticity of demand
was –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was
а
$240 and that Canon's marginal cost was $180 per camera.
1.
Based on the above information, discuss industry concentration, demand and market conditions,
and the pricing behavior of Canon in 2006 and explain how the industry environment
significantly influence the performance of the digital camera firms.
2. Suppose you were the CEO of Kodak, what would you do to avoid its business failure? Please
apply appropriate analytical tools from managerial economics to your analysis.
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- In 2006, the five leading suppliers of digital cameras in the United States were Canon, Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The own price elasticity for Canon’s cameras was –4.0 and the market elasticity of demand was –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was $240 and that Canon’s marginal cost was $180 per camera. Suppose you were the CEO of Kodak, what would you do to avoid its business failure?arrow_forwardIn 2006, the five leading suppliers of digital cameras in the United States were Canon, Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The own price elasticity for Canon’s cameras was –4.0 and the market elasticity of demand was –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was $240 and that Canon’s marginal cost was $180 per camera. Based on this information, discuss industry concentration, demand and market conditions, and the pricing behavior of Canon in 2006. Do you think the industry environment is significantly different today? Explainarrow_forwardSuppose the European Union (EU) was investigated and proposed a merger between two of the largest distillers of premium Scotch liquor. Based on some economists' definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is -1.4 and that it costs $16.50 to produce and distribute each liter of Scotch. Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor. Instructions: Do not round intermediate calculations. Enter your final responses rounded to the nearest penny (two decimal places). Pre-merger price: $ 9.65 Numeric Response 1. Edit Unavailable. 9.65 incorrect. Post - merger price: $ 11.22 incorrectarrow_forward
- Suppose the European Union (EU) was investigated and proposed a merger between two of the largest distillers of premium Scotch liquor. Based on some economists' definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is -1.9 and that it costs $16.90 to produce and distribute each liter of Scotch Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor. Instructions: Do not round Intermediate calculations. Enter your final responses rounded to the nearest penny (two decimal places). Pre-merger price: $ 19:43 Post-merger price: $ 23.02arrow_forwardIn 2006, the five leading suppliers of digital cameras in the United States were Canon,Sony, Kodak, Olympus, and Samsung. The combined market share of these five firmswas 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. Theown price elasticity for Canon’s cameras was –4.0 and the market elasticity of demandwas –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was$240 and that Canon’s marginal cost was $180 per camera. Suppose you were the CEO of Kodak, what would you do to avoid its business failure? Please apply the specific tools from managerial economics to the case analysisarrow_forwardIn 2006, the five leading suppliers of digital cameras in the United States were Canon,Sony, Kodak, Olympus, and Samsung. The combined market share of these five firmswas 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. Theown price elasticity for Canon’s cameras was –4.0 and the market elasticity of demandwas –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was$240 and that Canon’s marginal cost was $180 per camera.1. Based on the above information, discuss industry concentration, demand and market conditions, and the pricing behavior of Canon in 2006 and explain how the industry environment significantly influence the performance of the digital camera firms.2. Suppose you were the CEO of Kodak, what would you do to avoid its business failure? Please apply the specific tools from managerial economics to the case analysarrow_forward
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