Micro-Economics Consumer Goods: Video Games and Its Software

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Consumer goods are the products that are purchased for use by the end-users. They can also be viewed as final products that no longer require further processing by manufacturers or that can be utilized by the consumers at their current state. Therefore, consumer goods are consumed by the consumer at their state to satisfy a current want.

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Purchase of consumer goods depends on the current consumer taste and preferences, which from time to time. Over the years between 2000 and 2011, the sales of video game software changed significantly with consumption moving from traditional play stations to more advanced internet ones. For example, the sale of Sony play station 2, which was released in the year 2000, had high sales in between years 2000 to 2007. From which, Sony play station 3 that is more advanced launched in the year 2006 had higher sales that kept n increasing as the one for play station 2 decreased. While sales of Sega dream cast diminished by mid-2002, Microsoft Xbox 360 sales become relatively high from the same year. The movement of sale from traditional to more advanced internet enabled video game software has increased and lead to the changes in the sales. The technological change resulting in the difference in the tastes and preference can be attributed to the changes sales.

Growth in sales of video games led to a reduction in the sales of traditional toys. The video games have led to an almost elimination of traditional toys sale with low sales being made in the later year, for example in the year 2011, very few sales of the traditional sales were reported. The reduced quantity of sales of the traditional toy sales can be attributed to the changes in demand and supply of the traditional toys as a result of close preference of close substitute, the video games as shown in the figure below (Krugman, Wells, & Kelly, 2012, p. 113).

The growth in sales of video games led to the reduction in the demand for the traditional toys leading to shifting of the demand curve of traditional toys from D0 to D1. The shift in demand curve leads to a reduction of toys purchased as well as the sales. In the long run, the producers of the traditional toys reduce the production by closing the lines or shifting to video games leading to a reduction in supply. The decrease in the supply of the traditional toys leads to further reduction of the sales of the traditional toys. Therefore, the effect of the growth of the video game is a reduction in demand and supply of traditional toys and hence sales.

Private costs are the costs that one incurs in the process of acquiring a product or service (Hirschey, 2016). In the perspective of the video games, the private cost can be viewed as the expenses paid for by the consumer to have the video game working; it may include the cost of the video game software and internet fee paid. Social cost, on the other hand, is the sum of private cost and external cost. External costs are costs to the society that arises as a result of the consumption of a private product.

Private and social costs for video games can be distinguished in economics in that the cost incurred to acquire the games and its effects on the players. The costs of purchasing the video game are private while the consequences of the games on the players, especially children are external cost together with the private making up the social cost. Some of the issues that lead to social costs on video games include, violence developed in children, anti-social nature, bad language, health problem such obesity, and an increase in depression and anxiety levels as a result of concentration in the games. In economics, the external costs can be distinguished from the private cost in that the result of playing the game would affect the society adversely with some effect such as violence leading to crime and poor health leading to rising in the medical care costs. Low concentration in academics and the other social issues as a result of the video game can lead to reduced education level in the society, and hence an adverse effect on economic growth. In economics, the differentiation between the social and the private costs of the video games is the bearer of the expenses associated with its use. Where, costs that are not directly seen such as the cost of violence, the cost of deteriorated health, and the rise of antisocial behavior being classified as social costs.

Public policy can address the cost associated with the video games in different ways depending on the effect on children. Violent video games can have a restriction of age or a complete ban from being sold in a particular region (Hirschey, 2016, p. 416). Public policies can also enforce the supervisor of parent or guardians on children and ensure that the children participate in outdoor activities to enhance their wellbeing.

Video games can be associated with both social and private costs and in economics the two can be distinguished by the actual cost bearer. The social and private cost arising from video games can be addressed by public policies enacted to control their use. The public policies can restrict, ban or even set out conditions of consuming the video games such as supervision of children by a guardian.


Hirschey, M. (2016). Managerial Economics (pp. 407-551). Kansas, Missouri: Cengage Learning.

Krugman, P., Wells, R., & Kelly, E. (2012). Study Guide for Microeconomics. New York: W.H.Freeman & Co Ltd.

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