Question

Microsoft tried to compete with Apple's iPod by releasing a portable MP3 player in 2006 called the ___.

A. Zune.
B. Zoop.
C. Zine.
D. Zuul.

Answer 1

Microsoft released an MP3 player in 2006 called the Zune to compete with the iPod. The Zune was unable to dethrone the iPod, and the rise of digital music players impacted the market for older portable music devices like the Sony Walkman, leading to a lower equilibrium price and quantity for these older devices.

Step-by-step explanation:

Microsoft attempted to compete with Apple's iPod in 2006 by releasing a portable MP3 player called the Zune. Although the Zune offered features such as a built-in FM radio and the ability to share songs between devices, it ultimately failed to rival the iPod's popularity. The transition to portable digital music players like iPods significantly affected the market for previous music technologies, such as the Sony Walkman, which played cassettes. This is analyzed using a four-step process examining the impact on equilibrium price and quantity.

Here are the four steps:

1. Determine demand shifts: The introduction of the iPod led to a decrease in demand for older technologies like the Walkman.
2. Shift in supply curve: Initially, the supply remained but the demand declined.
3. New equilibrium: The intersection of supply and demand shifted, leading to a lower equilibrium price and quantity for the Walkman.
4. Market adjustment: Over time, suppliers reduced the production of Walkmans and increased the production of digital music players.