The revenue of the software grew year-over-year in May 2010. However, software unit sales have eroded further in the first 5 months than in 2009, and the average weekly software unit sales declined a further 9.5% for that period of 2010. Total software revenue has declined only 6.7% this year. This is because consumers are buying slightly more expensive games. During January to May in 2009, the revenue of Wii increased 10%. Meanwhile the PS3 has increased only 8%. The change in the first 5 months of 2010, PS3 has taken up every bit of market share ceded by Wii.
The article has used following economic concepts:
1) Demand and Supply
3) Price Elasticity
4) Market Structure
Demand and Supply
(1)The law of demand states: Inverse relationship between quantity demand and price, other things remaining constant. *when the price of a good falls, its relative price makes consumers more willing to purchase this good→quantity demanded increase (2)The law of supply states: Positive relationship between price and quantity supplied, other things remaining constant. *other things remaining the same, the higher the price of a good, the greater is the quantity supplied
A substitute is a good that can be used in place of another good.
Price Elasticity of Demand
The price elasticity of demand is a units-free measure of the responsiveness of he quantity demanded of a good to a change in ts price ,when all other influences on buyers` plans remain the same. *the closer the substitutes for a good or service, the more elastic is the demand
“Total software revenue has declined only 6.7% this year, noticeably better than the nearly 10% fall in unit sales. The difference, of cause, is that consumers are buying slightly more expensive games, leading to an increase in the average selling price and lessening the blow that dropping unit sales have had on total revenue.” [pic][pic]
*The price of Wii were getting slightly more...
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