The concept of demand and supply as well as the relevance of microeconomics

I recently got into a market transaction in the home entertainment market through purchasing a Play station 4. The play station is a Sony Computer Entertainment’s fourth video game console which competes with the current seventh generation of comfort alongside Nitendo’s Wii and Xbox 360. With the increased advancement for new technologies such as the motion sensors and the high definition, it was only natural that the game consoles would evolve in order to incorporate the coming breakthroughs. The play station portable has enabled not only the consumers to play but also allowed the connectivity of certain features used to play the play station games (Tsern and Mooring, 2018).

Play station portable has had a great success throughout the world as one of the most common handheld games. Organizations such as Nintendo company Ltd, Microsoft corporation, Sony corporation and Nvidia Corporation have contributed to the biggest market revenue in the production of various portable gaming comfort equipment’s (Abrate and Menozzi, 2017). The portable gaming has gained much attention in the gaming world. The two major features of the portable gaming are its weight and screen which have driven the demand in the market. These gaming consoles have been relied on by the electric consumers for reasons such as the 3D technology. Due to the increased mobile gaming consoles due to technological advancement, they have allowed a secure download and playing of games through the use of handheld products.

With the coming of eighth generation gaming consoles and being a great video game enthusiast and for the dedication for video games the game experience for Play station 4 brought the desire to purchase the product. An overview of portable gaming console market has indicated that Sony has always offered a popular brand with high reputation. With the increased usage for Play station 3, Sony has been able to create a strong consumer reputation. The price for Play Station 4 indicates that Sony has focused on a demand oriented pricing whereby the price is influenced by the demand for the product. The new release for Play station 4 has brought about a high demand which has competed greatly with other portable gaming consoles. Due to the increased plugging remote play as well as the convenience for the consumer to rely on it, PS4 has been empowered to meet the growing demand for more efficient portable console games with the surging demand for digitization (Tsern and Mooring, 2018).

Supply and demand and Price

The law of demand explains that the quantity demand rises as the price lowers and other things are constant (Marwala and Hurwitz, 2017). Play Station 4 is one of the eighth generation gaming consoles that are at demand despite fierce competition from other gaming consoles as well as video games in smart phones


The law of supply and demand explains the interaction between the seller and the buyer of the item. The supply and demand curve above shows that the change in demand affects the price and the quantity demanded. The shift from D1 to new curve D2 leads to an increase in the equilibrium price from P1 to P2 which then raises the equilibrium quantity from Q1 to Q2. The Play Station 4 phenomena has given a god example of this economic principle happens. The play station 4 was released into the market after a great deal of media hype and advertisement that ensured an increased demand for the product that would outweigh their supply. After the release there were more consumers who demanded to purchase the product than what had been produced. The latest improvements on Play Station 4 have driven more demand. Another major factor that has affected the demand and supply for this gaming console is alternative and competition due to gaming consoles such as Microsoft Xbox 1 which is part of the eight generation gaming console. With such alternative products in the market the completion that arises due to the new and existing products may lead to a change in the demand thus impacting the supply and demand for Play Station 4 (Gillman, 2011).

Among other factors that have influenced the supply and demand for the product are the income level that allowed me to get into the luxury products market as well as the utility offered by PS4 that in effect provided me with services of multitude of various products (Nickels, McHugh and McHugh, 2008). Sony has also been able to reduce the retail market price which has made them more competitive as compared to other products. Just as many people are buying the gaming console, a portion of them have elected to purchase alternative products. In most cases, products such as gaming consoles have been impacted by trend which has impacted the fall and rise of demand. For instance, in this case, the demand for Play station 4 has risen impacting its price in the market. Commercial advertising on the internet and television have impacted the demand and supply for Play station 4. This is because most of the people are now aware about the product availability. The seasons have also affected demand and supply drastically. Play station four supply and demand during the holidays was high as compared to other seasons during the year.

Price elasticity

With the current price of the product in the market it is evident that the price for PS4 is elastic. This is due to the nature of the item being a gaming console. The fact that the item is a luxury product, customers have the likelihood of being price sensitive and so the PS4 is against fierce competition in case the price were shifted to have strong impact on the demand (Bade and Parkin, 2015). Thus, if the company is to increase the price for PS4 they expect to have low returns. This is because the predicted product demand will be expected to lower more than the percentage increase the product price can cover.

Video games have been seen to have high price elasticity. Since there are close substitutes, this has become of the greatest factors that raise the price elasticity. Currently, there are three available game consoles which are Nintendo, Xbox and PlayStation. Considerably, when the prices for these products increase, the demand will lower while if the price decrease their demand will increase (Mulhearn and Vane, 2015). This means that dropping the value of a certain video game will increase the revenue to the producer. With the sales figures it is evident that there is a high elasticity at work. The company begun with a high retail price which led to poor sales. This was then recoupled by reduced price and increased complimentary products. ‘


In conclusion, the concept of demand and supply as well as the relevance of microeconomics has been analyzed through the behavior of the market through the law of supply and demand. The study on Play station 4 market transaction has analyzed the behavior of buyers and producers considering the decreased in demand and increase in price and vice versa. From a more concrete view point there are various factors that have impacted the demand and supply od a product in the market such as the trend, technological advancement, personal income, availability of alternatives and the consumer preferences.


Abrate, G., & Menozzi, A. (2017, December). Value co-creation in the video game industry. In Toulon-Verona Conference” Excellence in Services”.

Bade, R., & Parkin, M. (2015). Foundations of microeconomics. Pearson.

Gillman, M. (2011). Advanced modern macroeconomics: analysis and application. Financial Times Press.

Marwala, T., & Hurwitz, E. (2017). Supply and Demand. In Artificial Intelligence and Economic Theory: Skynet in the Market (pp. 15-25). Springer, Cham.

Mulhearn, C., & Vane, H. (2015). Economics for business. Macmillan International Higher Education.

Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2008). Understanding Business 9th ed. McGraw-Hill Irwin: New York, NY.

Tsern, E., Tsern, M., Mooring, D., & Mooring, M. (2018). U.S. Patent Application No. 10/084,644.

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