Suppose that there are only three types of fruit sold in the United States. Annu

Question

Suppose that there are only three types of fruit sold in the United States. Annual sales are 1,100,000 tons of blueberries, 5,200,000 tons of strawberries, and 10,000,000 tons of bananas. Suppose that of those total amounts, the Sunny Valley Fruit Company sells 1,000,000 tons of blueberries, 900,000 tons of strawberries, and 7,900,000 million tons of bananas. a. What is Sunny Valley's market share if the relevant market is blueberries? % If a court applies the "90-60-30 rule" when considering just the blueberry market, would it rule that Sunny Valley is a monopoly? b. What is Sunny Valley's market share if the relevant market is all types of berries? % Would the court rule Sunny Valley to be a monopolist in that market? c. What if the relevant market is all types of fruit? What is Sunny Valley's market share? % Would the court consider Sunny Valley to be a monopolist?

Explanation / Answer

a. Sunny Valley's market share in blueberries = (1,000,000/1,100,000) X 100 = 90.91%

Since, share of Sunny Valley is more than 90% in the market of blueberries so Sunny Valley is a monopoly in the blueberry market.

b. Sunny Valley's market share in berries = [(1,000,000 + 900,000)/(1,100,000 + 5,200,000)] X 100

= 1,900,000/6,300,000 X 100 = 30.15%

Since, share of Sunny Valley is 30% in the market of berries so Sunny Valley is not a monopoly in the blueberry market.

c. Sunny Valley's market share in all types of fruits

= [(1,000,000 + 900,000 + 7,900,000)/(1,100,000 + 5,200,000 + 10,000,000)] X 100

= [(9,800,000)/(16,300,000)] X 100 = 60.12%

Since, share of Sunny Valley is almost 60% in the market so Sunny Valley may be a monopoly in the fruits market.

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