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1.2.6 Price determination

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Question 7

Extract A

Rising prices of premium handheld gaming consoles

Specialist organic light-emitting diode (OLED) display panels serve as a key component for premium handheld gaming consoles. Manufacturers of these consoles are facing substantial increases in the cost of high-quality display panels as they compete with smartphone manufacturers for limited production capacity. The cost of a standard OLED display panel assembly has jumped from 35tomorethan 35 to more than \,35tomorethan95 per unit. The retail prices of these handheld consoles have risen due to these escalating component costs and a massive surge in demand driven by the release of highly anticipated exclusive multiplayer games.

With reference to Extract A, explain the likely reasons for the change in the price of premium handheld gaming consoles. Include a supply and demand diagram in your answer.

Premium Handheld Console Market Supply and Demand Diagram

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1.2.6 Price determination Questions

  1. A Level
  2. /Economics
  3. /1.2.6 Price determination