Answer to Question #177246 in Microeconomics for Noor

Question

Games consoles, such as Xbox, are sometimes sold bundled with games and sometimes without games. Using your understanding of elasticity, when is it good to bundle and when is it good not to bundle? Explain.

Answer 1

Elasticity is predominantly used as a tool to assess change in consumer demands as a result of a change in goods or services' price. Bundling is best used at the introduction phase of a new product to peak customers interest in the product. After establishing a market for the product, bundling is no longer necessary and the two can be sold separately.