On October 1, 2009, the Nintendo Wii's Japanese Price Dropped

question 171

Multiple Choice

On October 1, 2009, the Nintendo Wii's Japanese price dropped from ¥25,000 to ¥20,000. In the three months after the price drop, Japanese sales of the Wii were approximately 1,040,000. Twelve months earlier, over the same interval at the high price, sales totaled 890,000. Using the midpoint method, what is the absolute value of the price elasticity of demand of a Wii console? Is it an elastic or inelastic good?

• A) 1.43; inelastic
• B) 0.7; inelastic
• C) 1.43; elastic
• D) 0.7; elastic

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Definitions:

Velocity

In economic terms, the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period.

Money Supply

Money Supply refers to the total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.

M Rises

This term is unclear without context, but could refer to an increase in a specific variable "M" in mathematical, economic, or other models.

Percentage Rise

A measure of how much a quantity increases over a period, expressed as a percentage of the initial value.