Tom Troiano Macro Econ.

http://news.google.com/newspapers?nid=1346&dat=20001011&id=FPEvAAAAIBAJ&sjid=qP0DAAAAIBAJ&pg=3749,169088

As you can see from this newspaper article posted on October 11th 2000, there was a massive frenzy for Sony's Play Station 2. The anticipation for this gaming console was great in late 2000. Parents and teens across the country greatly anticipated the gaming systems release just before the start of the holiday season. This was supposed to be a huge hit and a huge profit for Sony. Because of manufacturing delays Sony did not release all 1.4 million Playstation 2's on time. They only released about 500,000. Now as you can imagine the demand for these PS2's was great because kids were begging parents to get one, and right around the holiday season there was no better present. Sony's delayed production led to a massive increase in demand for buyers. Not only did the demand become so high that people were willing to overpay for a game system that at most cost 200 dollars, but some people ended up paying thousands. People ended up buying these systems and re selling them on Ebay for 5 times the price. Looking at this incident on the Supply and Demand curve would show you that the demand side of the curve was very high, therefore jacking up the price of the product. Also because the price wasn't naturally increased by Sony, the demand curve chart was way up, drastically increasing prices. This situation had a skewed market equilibrium, there was simply not enough supply to meet demand. Furthermore if you look at this items price elasticity, it was basically non existent ( change in demand in % divided by change in price in %). The reason i say that is because even when the Playstation went on Ebay and the price was 3 or 4 times more expensive the demand never changed. This incident was one that really took the supply and demand charts and made no sense of them. Buyers were buying not with there heads, but they were buying on impulse. It seemed like there was no price to high for the Playstation 2 during this frenzy. It will be interesting to see when the next incident like this occurs. Tom Troiano