You are a manager in charge of monitoring cash flow at a major publisher.Paper books comprise 40 percent of your revenues, which grow about 2 percent annually.You recently received a preliminary report that suggests the growth rate in ebook reading has leveled off, and that the cross-price elasticity of demand between paper books and ebooks is -0.3.In 2016, your company earned about $600 million from sales of ebooks and about $400 million from sales of paper books.

If the own price elasticity of demand for paper books is -2, how will a 4 percent decrease in the price of paper books affect your overall revenues from both paper books and ebooks sales?

Suppose the cross-price elasticity of demand between goodsXandYis -4. How much would the price of goodYhave to change in order to change the consumption of goodXby 10 percent?

Firms like Papa John's, Domino's, and Pizza Hut sell pizza and other products that are differentiated in nature. While numerous pizza chains exist in most locations, the differentiated nature of these firms' products permits them to charge prices above marginal cost. Given these observations, is the pizza industry most likely a monopoly, perfectly competitive, monopolistically competitive, or an oligopoly industry?

Use the casual view of structure, conduct, and performance to explain the role of differentiation in the market for pizza.

Then apply the feedback critique to the role of differentiation in the industry.

Under what conditions might the Justice Department approve a merger between two companies that operate in an industry with a post-merger Herfindahl-Hirschman index of 2,900 if the increase in the Herfindahl-Hirschman index from the merger is 225?