Help Save&Exit; Submit Check my work largest distillers of premium Scotch liquor
ID: 1114388 • Letter: H
Question
Help Save&Exit; Submit Check my work 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, suppo market elasticity of demand for Scotch liquor is -1.8 and that it costs $15.70 to produce and distribute each liter of Scotch. se that the (wholesale) Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor Instruction: Do not round intermediate calculations. Enter your final responses rounded to the nearest penny (two Pre-merger price: $ Post-merger price: $Explanation / Answer
Question 8). Solution :- Calculation of pre-merger price in the given question :-
Pre-merger price = 15.70 * (-1.8 * 3) / [ 1 + (-1.8 * 3) ]
= 15.70 * (-) 5.40 / [ 1 + (-) 5.40]
= 15.70 * (-) 5.40 / (-) 4.40
= (-) 84.78 / (-) 4.40
= $ 19.27 (approx).
Calculation of post-merger price in the given question :-
Post-merger price = 15.70 * (-1.8 * 2) / [ 1 + (-1.8 * 2) ]
= 15.70 * (-) 3.60 / [ 1 + (-) 3.60 ]
= 15.70 * (-) 3.60 / (-) 2.60
= (-) 56.52 / (-) 2.60
= $ 21.74 (approx).
Conclusion :-
Question 23). Solution :- Calculation of pre-merger price in the given question :-
Pre-merger price = 16.90 * (-1.9 * 3) / [ 1 + (-1.9 * 3) ]
= 16.90 * (-) 5.70 / [ 1 + (-) 5.70]
= 16.90 * (-) 5.70 / (-) 4.70
= (-) 96.33 / (-) 4.70
= $ 20.50 (approx).
Calculation of post-merger price in the given question :-
Post-merger price = 16.90 * (-1.9 * 2) / [ 1 + (-1.9 * 2) ]
= 16.90 * (-) 3.80 / [ 1 + (-) 3.80 ]
= 16.90 * (-) 3.80 / (-) 2.80
= (-) 64.22 / (-) 2.80
= $ 22.94 (approx).
Conclusion :-
Pre-merger price $ 19.27 Post-merger price $ 21.74Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.