John wants to buy WWE SmackDown vs. Raw, a new video game marketed for the Xbox 360, a Microsoft and WWE joint venture. The game costs $65 and will only play on an Xbox 360 game console, which will cost him about $450. If he commits to buying the Xbox, it is unlikely he will buy anything but Xbox games due to:
A)switching costs.
B)product differentiation.
C)access to distributors.
D)capital requirements.

Question

Quizplus · Accepted Answer

Switching costs refer to the costs incurred by a consumer when switching from one product to another. In this case, if John commits to buying the Xbox 360, he will incur a significant switching cost if he decides to switch to a different gaming console in the future. This is because he will have to buy all new games and accessories for the new console, which can be expensive. Therefore, the best choice would be A, switching costs.

John Wants to Buy WWE SmackDown Vs