Discuss about technological change in blu-ray production

Reference no: EM132115819

Question: Another DVD Format, but It's Cheaper New Medium Enterprises claims that its new system, HD VMD, is equal to Blu-ray's but at $199 it's cheaper than the $300 Blu-ray player. The Blu-ray Disc Association says New Medium will fail because it believes that Blu-ray technology will always be more expensive. But mass production will cut the cost of a Blu-ray player to $90.

a. Explain how technological change in Blu-ray production might support the prediction of lower prices in the long run. Illustrate your explanation with a graph.

b. Even if Blu-ray prices do drop to $90 in the long run, why might the HD VMD still end up being less expensive at that time?

Reference no: EM132115819

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