Microsoft thought that the initial Xbox was sufficiently different from PS2 that it could charge a significantly higher price for the Xbox than Sony could charge for PS2. Which of the following statements is implied by Microsoft's product positioning?
A) Microsoft believed that the PS2 was a distant substitute for the Xbox and therefore the demand curve for Xbox would be elastic. Charging a higher price would enable it to increase its profits.
B) Microsoft believed that it had differentiated the Xbox sufficiently to insulate it from competition and to cater to a unique niche. Consequently, it would be able to charge a higher price and increase its profits.
C) Microsoft recognized that the PS2 was a substitute for the Xbox but it believed that the Microsoft name would be sufficient to draw customers away from the PS2 and that customers would be willing to pay a premium for Microsoft's product.
D) Microsoft believed that the PS2 was poor substitute for the Xbox and therefore the demand curve for Xbox would be inelastic. Charging a higher price would enable it to increase its profits.

Question

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The Answer of Microsoft thought that the initial Xbox was sufficiently different from PS2 that it could charge a significantly higher price for the Xbox than Sony could charge for PS2. Which of the following statements is implied by Microsoft's product positioning?
A) Microsoft believed that the PS2 was a distant substitute for the Xbox and therefore the demand curve for Xbox would be elastic. Charging a higher price would enable it to increase its profits.
B) Microsoft believed that it had differentiated the Xbox sufficiently to insulate it from competition and to cater to a unique niche. Consequently, it would be able to charge a higher price and increase its profits.
C) Microsoft recognized that the PS2 was a substitute for the Xbox but it believed that the Microsoft name would be sufficient to draw customers away from the PS2 and that customers would be willing to pay a premium for Microsoft's product.
D) Microsoft believed that the PS2 was poor substitute for the Xbox and therefore the demand curve for Xbox would be inelastic. Charging a higher price would enable it to increase its profits.

Microsoft Thought That the Initial Xbox Was Sufficiently Different from PS2