Supply and Demand - Shortage of Microsoft’s Xbox 360 Gaming Console

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being sold in stores today, however, both the supply and demand have stabilized (due in part to the release of the XBOX One) and any consumer willing to pay the store retail price can easily attain the system.

Microsoft’s media hype, advertising, social pressures created by the holiday season, and lack of supply produced an incredible demand for the XBOX 360 in 2005 that at the time was unable to be met. This resulted in gaming consoles being purchased at a price that was well above retail. As pressures from the holiday season and the hype of the new system died down, the demand for the product decreased (as well as price) which led to an upward shift in the supply of the system. It is argued that “Microsoft got it wrong, too, they have missed out on a far more obvious opportunity. Why didn’t they sell their initial supply of Xbox consoles, packaged as a ‘limited edition’, using online auctions? All the while they would promise $300 consoles as soon as stocks were available. Since at an auction the price is set by the buyers, not the seller, Microsoft could have made a killing, absolutely guilt-free, and created no more annoyed, empty-handed customers than they have with their current strategy” (Harford 2). These factors and events that took place in 2005 are what led to the shortage of Microsoft’s XBOX 360 gaming console, which was clearly a perfect illustration of the directly inverse relationship between supply and demand.

Bibliography

Fisher, Ken. "Xbox 360: Shortages No Joke." Ars Technica. Ars Technica, 22 Nov. 2005. Web. 19 Feb. 2015. <http://arstechnica.com/uncategorized/2005/11/5609-2/>.

Harford, Tim. "Explaining the Great Xbox Shortage of 2005." Slate. Slate, 15 Dec. 2005. Web. 19 Feb. 2015. <http://www.slate.com/articles/arts/everyday_economics/2005/12/the_great_xbox_shortage_of_2005.html>.

McConnell, Campbell R., Stanley L. Brue, and Sean M. Flynn. Macroeconomics: Principles, Problems, and Policies. 20th ed. N.p.: McGraw-Hill/Irwin, 2014. Print.

Morris, Chris. "Xbox 360 on EBay? $5,000 and up." CNN Money. CNN, 22 Nov. 2005. Web. 19 Feb. 2015. <http%3A%2F%2Fmoney.cnn.com%2F2005%2F11%2F22%2Ftechnology%2Fpersonaltech%2Fxbox_ebay%2F>.