Topic: Would the demand for the Wii console be relatively inelastic or elastic?

Solution;
A wide range of Wii consoles are available in the market. It is a seventh generation
gaming console. A minor change in its price can lead to a greater demand for the
product. However, the console is not a necessity. If its price increases then it can be
purchased at any time when the consumer has extra money to spend on it. Therefore,
the demand for the Wii console would be elastic.

2}The demand for the Wii Console is relatively elastic. The demand is greatly affected

by the change in price and there are a lot of substitutes to the product (Microsoft and
Sony). According to the given case, it was stated that when they dropped their price, it
has ended the decline in sales.

3}The demand for the Wii console is relatively elastic because it has close substitutes which are the
PlayStation 3 and Xbox 360 and consumers will tend to shift to others if the price of Wii console
increases or if it happens that there is no availability left for it after its first hot lunch. 2. The supply for
the Wii console is relatively elastic because the quantity to be supplied is determined through the price.
Also in most markets, it is said that time period is considered as determinant of the price elasticity of
supply, and for Wii console, it is elastic in the long run that’s also why there is a severe shortage of its
supply because it needs to be on over a longer period a firm can build or produce more and more to
make wii available to those who want to walk into a retail store and pick one up. 3.

4}. The demand for Wii console will be relative elastic. As from the passage, it mention that “Nintendo
announced its first price drops for the console. In Japan, the price dropped from ¥25,000 to ¥20,000 and
they sold more than three million Wii consoles also ending 9 months of declining sales”. This shows that
that demand for Wii console is elastic as people responded to the price drop and thus they demanded
more which also help Wii console to earn back their losses. Also another reason that demand is
relatively elastic is that substitution is possible. Substitute such as Microsoft and Sony also produce
console, so people will still compare them with Wii console because some is sensitive to the prices, thus
some will still buy from Microsoft or Sony because it is cheaper and some of the function is same as Wii,
thus demand is relative elastic.

Ans2

 The supply for Wii console is relatively inelastic. As from the passage “The UK suffered a widespread
shortage of console units as many high-street and online stores were unable to fulfil all pre-orders by
Christmas 2006. Some UK stores still had a shortage of consoles by March of the next year”. Which this
shows that in a short run, Wii is unable to supply the customer more Wii console to meet the demand. It
did not respond to the demand of the customer by stocking up their console, maybe they will be more
elastic in a long run, as they might have more time to produce more console. Hence, the equilibrium
price for the Wii console is high.
4}¢ Was the severe shortage for over two years an old marketing ploy called intentional scarcity, in
which a company purposely keeps its hot product in short supply to build buzz. Or was it simply bad
planning on Nintendo's part? What did this mean for households? What were the implications for
SHORTAGE ¢ If the market price is (less) below the equilibrium price the quanYty demanded exceeds the
quanYty supplied then there is a shortage in the marketNintendo?

 The severe shortage for over two years is simply a bad planning on Nintendo’s part for if it’s an
intentional scarcity, they would not initiate a price drop by 2009, instead make its price higher with
respond to the demand of the consumers who are eager to buy. 5. Nintendo dropped the price of Wii
console in late 2009 to attract again more consumers to increase their sales, for based on its shortage
for 2 years, they might had a big loss on sales because consumers shifted to Wii consoles’ close
substitute which are PlayStation 3 and Xbox 360. And for their revenues, there is an increase again on it
as consumers again bought the Wii console with a lower price back again on its worldwide top-grossing
product that caused for a more higher earnings.