handout 2-fall09

handout 2-fall09 - ECON 221 Prof. Sankaran Principles of...

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ECON 221 Principles of Microeconomics Prof. Sankaran PRINCIPLES OF MACROECONOMICS ECON 221 FALL 2009 Owww! This is some heavy stuff! LECTURE NOTES: Chapter 5 PROFESSOR: CHANDINI SANKARAN Division of Business and Economics 1/19
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ECON 221 Principles of Microeconomics Prof. Sankaran University of South Carolina 2/19
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ECON 221 Principles of Microeconomics Prof. Sankaran Chapter 5: Elasticity China Mobile, Ltd., is a Hong Kong-based provider of mobile telecommunications services to over 125 million subscribers in mainland China. The company has enormous growth opportunities in service regions that cover most of China’s economically advanced provinces, municipalities, and autonomous regions. The total population residing within its service area exceeds 1 billion persons. China Mobile also enjoys an enviable market position. The company is the dominant provider of mobile telecommunications services throughout China. Chinese government estimates place China Mobile’s market share at roughly 60 percent of all mobile telecommunication service subscribers in mainland China. Rapid growth in the number of subscribers accompanied by soaring revenues and cash flows have made the company a stock market darling. Investors eagerly await interim financial reports that offer details on the company’s progress. In particular, investors closely track China Mobile’s “favorable price elasticity and the strong growth of new business revenue.” China Mobile’s has been offering high-end customers packages to discourage them from switching to competitors. A key contributor to the company’s recent success has been the fact that theses aggressive price discounts have, at least so far, spurred rapid revenue growth. Going forward, much of the firm’s success
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handout 2-fall09 - ECON 221 Prof. Sankaran Principles of...

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