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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 215.32-0.2%Dec 30 3:59 PM EST
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To: wbmw who wrote (247757)2/13/2008 6:23:24 PM
From: pgerassiRead Replies (1) of 275872
 
Wbmw:

Haven't gotten prices from a new monopoly lately have you? All of your examples are with competition. The best examples of how much price elasticity is what happens when capacity goes up. How much does the price have to drop to sell 5% more product? How much does it have to rise to sell 5% less product? If a small change in supply causes a large change in price, the market is said to be inelastic. Its that way in the Oil market where a 5% drop increases prices by 50%. And so it is in the CPU market.

Without AMD, there is an immediate 20% drop in supply. So you should do those 5% changes four times to get an idea of what a 20% change does. Looking at the historical records, that much of a supply drop would more than double prices. There goes your price elasticity argument.

Pete
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