There Are Two Types of Consumers of X-Box Video Game

question 56

Essay

There are two types of consumers of X-box video game systems.The first type of consumer is highly eager to purchase the newest game systems.Their demand is The resulting marginal revenue function is After the first month the X-box systems are on the market,the first-type demand goes to zero at any price.The second type of consumer is more sensitive to price and will be the same one month after the systems are on the market.Their demand is The resulting marginal revenue function is The marginal cost to the manufacturers is constant at $75.If the X-box manufacturer initially sets the system price at $337.50,calculate their producer surplus.Do any second type customers purchase the X-box system at the initial release? Sometime after the initial release,the manufacturer lowers the price to $187.50.If only the second type of customer purchases the system at this later date,calculate producer surplus from these sales.Why does the X-box manufacturer have an incentive to charge a high relative price at initial release and then lower the price considerably sometime later?

---

Definitions:

Programming Language

A programming language is a formal language comprising a set of instructions that produce various kinds of output, used in computer programming to implement algorithms.

Primitive Data Types

Fundamental data types provided by a programming language as building blocks, such as int, float, char, and boolean in Java.

Java

A popular, high-level, object-oriented programming language designed to have as few implementation dependencies as possible, making it a widely used language for cross-platform applications.

Variable Declared

Declaring a variable refers to the process of defining a variable by specifying its type and name, making it known to the program.