$6.$ Can the optimal outcome be sustained? If so$,$ how? If not, why?

$7.$ Assume that demand curves are all linear. Calculate the own$-$price elasticities of

demand for both Sony and Microsoft at prices $$299$ and $$399.$ Consider holding the

price of the competitor constant in two scenarios, $$299$ and $$399.$ For each firm, you

must calculate $4$ elasticities. You can also calculate the own$-$price elasticity at the

average price and quantity. Overall, which product is more elastic? What does the

difference in elasticities tells us about the consumers$$ view on these products?

$8.$ Considering the own$-$price elasticities, is the strategy of lowering prices too excessive?

Please explain.

$9.$ Calculate the cross$-$price elasticity for both Sony and Microsoft from the starting price of

$$399($of both firms$).$ Which product has more brand loyalty? Why?

Exhibit $2$

Sony PlayStation $3$ Production Costs per Unit $($US dollars$)$

Exhibit $3$

Micros oft Xbox $360$ Elite Production Costs per Unit $($US dollars$)$

Exhibit $1$

Prices and Projected Annual Sales Volumes for Sony PlayStation $3$ and Microsoft Xbox $360$ Elite