Live in your worldplay in ours

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Live in your worldplay in ours
Natalie Stewart Katie Poelking
Joel Cortileso RD Buckwalter
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Table of Contents

• What is Economics
• Price Discrimination
• Opportunity Cost
• Government Intervention
• Income Effect

• Perfect Competition
• Oligopoly
• Diversification
• Factors of Production
• Demand

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What is Economics?

• The study of choice under conditions of
  scarcity.
• Economics is a social science that studies
  aspects of human behavior relating to working,
  producing goods, distributing them, and
  consuming them.

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Price Discrimination

• Price discrimination is when a seller charges
  different prices to different consumers for
  reasons other than differences in production
  costs.

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Sony Price Discrimination

• Sony uses coupons as a way to attract
  customers. This
• is a form of price discrimination.

No Price Discrimination
Price Discrimination
P
P
P
p1
p2
p3
Q
Q
Q
q
q2
q3
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Opportunity Cost

• Opportunity cost is the value of the best
  alternative
• Or alternatives, sacrificed when a firm focuses
  resources
• On a particular action.

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Sonys Opportunity Cost
The decision by Sony to produce a new gaming
platform Involved an opportunity cost. By
focusing resources on this New gaming unit, PS2,
they gave up their best alternatives Such as
simply improving the current PS1 and
improvements Of their computers.
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Government Intervention

• Government intervention is when the
  government
• takes a position of mandating that a firm
  comply with
• particular policies for the common good of the
  general
• population.

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Government Intervention in Sony

• The FCC (Federal Communications Commission)
  recently
• Mandated that by the year 2004 or 2007, depending
  on the
• Size of the television, all televisions will be
  required to have
• The capability of transferring digital signals.
• As a result of this government intervention,
  Sony and other
• Producers claim the cost to consumers will rise
  because of
• An increase in production costs versus current
  analog TVs.

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The Income Effect

• Income effect states that as the price of a
  product decreases
• The consumers purchasing power increases,
  causing a change
• In the quantity demanded for the good.

Inferior Good vs. Normal Good
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Income Effect on TV Sales

• Sony Corp. produces two types of television
  sets. The Trinitron
• Series is the typical TV found in most
  households, and sells for a
• a reasonable price. On the other hand, the Wega
  flat screen TV
• sets sell for nearly twice the price.

P
QD
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Perfect Competition

• In order for a company to fall under perfect
  competition they must
• Satisfy three criteria
• There must be a large number of buyers/sellers
• The product must be standardized
• Sellers must be able to easily enter and exit
  the market

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Sohow does Sony fall under Perfect Competition?

• There are a large number of sellers pf
  mainstream consumer
• Electronics such as TVs, DVD players and CD
  players i.e. Zenith, Apex,
• Phillips. There are also a large number of
  buyers for these products,
• Sony recorded sales of 18.5 billion in its last
  fiscal year.
• Many of Sonys products are standardized, in
  that you can not find
• much difference between a Panasonic and Sony TV.
• Many (however not all) of the markets Sony
  represents are easy to
• enter and exit. Portable audio players, car
  audio and electronic accessories
• are all examples of this.

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Oligopoly

• An oligopoly is a market structure with very few
• firms that are producing either
• Homogeneous product
• or
• Heterogeneous products

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But I thought Sony fell under Perfect
Competition!

• Play Station 2 is an example of an oligopoly
• market that Sony participates in.

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Diversificationhmm

• Diversification is the process of reducing
• risk by spreading sources of income among
• different alternatives, such as different
• consumer goods.

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How has Sony Diversified???

• Sony has become a conglomerate because
• of its diversification into multiple industries.
  
• From consumer electronics to music
• Production.

Electronics, Gaming, Music.
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Factors of Production

• Factors of production are the result of the
• Land, labor, capitol and entrepreneurial
• activity that are used in the manufacturing
• of a particular good and service.

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What are Some Examples of Sonys Factors of
Production

• Land The land which the factories and offices
  reside
• Labor The worker that are employed by Sony
• Capital
• -Human Capital Training of employees
• -Physical Capital Equipment used to assemble
  TVs
• Entrepreneurship All risks that Sony faces by
  marketing their product

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Factor Markets

• Households- Supply of Resources
• Firms- Demand for Resources

Supply Demand
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Demand

• Is a relationship showing the various amounts of
  an item which buyers are willing and able to
  purchase at various possible alternative
  prices, during a given period of time.

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Playstation 2
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Sony PlayStation 2 in High Demand

• Sony is selling more PlayStation 2 consoles than
  they have the money to produce the chips.
• Surging Christmas sales of its Playstation 2
  games console have helped Japanese tech giant
  Sony record its strongest earnings increase in
  company history.

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Conclusion

• Sony continues to achieve advancements in the
• consumer electronics industry. These
  advancements
• along with continued industry growth and a
  willingness
• to remain Innovative have put SONY at the
  forefront
• of this latest revolution.
• Sony is an excellent candidate for economic
  analysis
• because of its broad spectrum of products.

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Works Consulted

• Hall, Robert E. and Lieberman. Economics
  Principles and Applications.
• Southwestern 2001.
• Sony Inc. Website _at_ http//www.sony.com
• Wired Website _at_ http//www.wired.com/news/digiwood
  /0,1412,54426,00.html
• Sony Corporation _at_ http//www.sony.net