Consider a market transaction that you have undertaken as a consumer which was notable because it is particularly recent, large or unusual. Analyse this transaction from a micro-economic standpoint.
I recently entered a sector of the home entertainment market by purchasing a Playstation 3. The Playstation 3(PS3) is Sony Computer Entertainment’s third video game console which competes in the current seventh generation of consoles alongside Microsoft’s Xbox 360 and Nintendo’s Wii.
With the advancement of new technologies such as high definition(HD) and motion sensors it was only natural that consoles would evolve to incorporate these new breakthroughs. The first seventh generation console to be released was Microsoft’s Xbox 360 on November 22, 2005 which introduced HD gaming. With this unique selling point Microsoft began to gain an increase in market share that threatened Sony Computer Entertainment’s current dominance over the market that was due to the success of the Playstation 2. In order to compete with Microsoft’s new console and retain their lead in market share Sony developed the PS3 which included their own unique selling point, the Blu-ray disc player, with hopes that this new feature would synergise well with the growing popularity of Blu-ray DVDs at the time as a complimentary good and attract customers to their product over Microsoft’s Xbox 360.
This was one of many factors that influenced my decision to purchase a PS3 including others such as a rise in personal income that allowed me to enter into this luxury good market and also the utility provided by a PS3 that in effect offered me the services of a multitude of different products combined into one. Also due to economies of scale and reduction in raw material costs, Sony has managed to reduce the manufacturing cost of producing PS3s over time which allowed them to cut the retail price making them even more competitive against other substitute products.
The PS3 was first released on...
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