Microsoft, Sony, and Nintendo are the three principal firms in the video game console market. How much price competition is most likely for video game makers?
A)There is almost none; the market sets the price.
B)There is some competition within a range of prices.
C)There is generally a price leader that sets the price.
D)Each firm is aware of each other's prices and may adjust prices based on those of the other firms.
E)Price is set by the seller but regulated by the government.

Question

Quizplus · Accepted Answer

Since Microsoft, Sony, and Nintendo are the three principal firms in the video game console market, they are aware of each other's prices and may adjust their prices based on those of the other firms. Therefore, there is likely to be some price competition within a range of prices. However, one firm may emerge as the price leader and set the price for others to follow.

Microsoft, Sony, and Nintendo Are the Three Principal Firms in the Video