Iphone Demand and Supply Theories

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Table of Contents

Introduction
The Rise of Iphone
Factors Affecting Supply And Demand of The Iphone
Elasticity or Inelasticity of Demand of a Product
Conclusion
Works Cited
Footnotes

Introduction

While bringing various commodities into the market, suppliers have to find a way to bring in a commodity of good quality in order to attract a good market but the most important knowledge to have is how to avoid losses at the same time satisfy the consumers of the product.

All this knowledge will have to be an application of the economics demand and supply theory. This means that the producer will have to satisfy the consumers’ demand for the product and at the same time producce the commodity at a price that he will be satisfied.

This period makes analysis of how it has been behaving in the market clear. An analysis of Iphones in the market for the past few years explains better how the theory of supply and demand works. This paper therefore, discusses the economics theory of demand and supply while applying the theory in how the production, demand and sale of Iphones have been in the last few years.

The Rise of Iphone

Since the launch, of the Iphone, it is evident that the demand of the product has been increasing, and there is fear that the latter may be overlapping the supply of the product. According to the laws of demand and supply, this behavior can be seen as a positive demand shift.

In definition, it is a point where the demand of a product increases. Cases of increase in demand may occur during holiday seasons, or when a product becomes more popular in a market. The law of demand states that when the value of either a good or service is low, then the demand is high.

However, when the price of a commodity is high, then the demand of that product decreases. On the other hand, when the price of a commodity is high, then the supply of that commodity is high, and when the price is low, the supply is also low. This falls under the supply law.

When there is a shift in demand, either negatively or positively, there will be a definite need for change in price and quantity of thee product to have a balanced equilibrium point. In other words, when if the consumers for a particular product increase, there should be an increase in supply of that product.

In the same case, according to the demand and supply law, when there is a demand shift, there should be an increase in the equilibrium price as well as the equilibrium quantity of that product. In the case of the production of the Apple Iphone, it seems that the supply of the product has been having trouble meeting the increased demand for the product. According to reports last year, it has been a fear that due to increased demand that outruns the supply; Apple may lose its consumers to alternative phones¹ (Deffree 45).

Factors Affecting Supply And Demand of The Iphone

In economics, the increase or decrease of a commodity pricing can be caused by several factors. In the supply law, if the production of a commodity is low, then the pricing is low. Other causes of a commodity pricing decrease include the ability to produce the commodity with cheaper means.

In the case of the Apple firm, the pricing of the iphone has gone incredibly low. For instance, the Iphone 3G today coasts over $200 less than when it was launched. In addition, the phone is said to have better applications in terms of speed among others.

This slash of pricing has been caused by the improvement in technology in that there has the firm has found easier means to produce and even better quality product. Therefore, in the question of pricing of the Apple Iphone, the Firm might have followed the law of demand and supply.

With the popularity of the product, it has been evident that the demand for the product continues to increase, and therefore in a demand supply curve, there should be a demand shift on the right side of the graph. According to the demand supply law, with a shift in demand, the price as well as quantity of a product should increase.

If it fails to increase, the graph may suffer an in-equilibrium. This might be happening in the sale of the Iphone because there is a hiked demand for the product; yet, the supply has not met the former. In the case of the prices, Apple might be using a unique strategy in that the older version of Iphones continue to reduce in prices, but other better versions of the same phone are brought to the market, at a higher price.

For instance, the Iphone 3 has continued to be supplied only at a cheaper price. Better yet, Apple has recently launched its newest Iphone 4 at a higher price. Somehow, the firm seems to try balance the price equilibrium by introducing the newest make of the Iphone in a hiked price. However, the firm might still have a problem in governing the quantity equilibrium, and there might be an evident shortage in supply of the popular product.

Elasticity or Inelasticity of Demand of a Product

In the question of elasticity or inelasticity of demand of a product, Apple’s Iphone should be easy to analyze. In the first place, elasticity in demand of product relies on several factors which include, accessibility or availability of products that can substitute the basic commodity, income of the consumer which enables him to consume the good and time that a consumer may use to stop using a particular commodity.

In the case of Apple’s products, the Iphone is an elastic product on demand. This is because the product is in a competitive market whereby consumers may opt to use other smart phones with similar applications. So, if the price of the Iphone goes high beyond the consumer’s meet, then, it is very easy for them to look for substitute products. At the same time, if the supply of the product is low, then the sale of the product would not be successful because consumers may opt to look for alternative products.

According to the economics theory of pricing and revenue, it is only logical that if the prises of a product increase, then the revenue should increase. With the improvement in technology, Apple has been able to produce high quality product which have quite a show of demand.

Even though, the prices of the new products including the Iphone4 and the new Mac handbook are high, consumers seem to be quite interested in the product. The hiked prices of the new products should therefore, bring an impact in revenue during a particular period. According to the company’s reports, the revenue has risen from $99.9 billion to $108 billion as at the year2011² (Zielenzier 3).

Conclusion

In my opinion, Apple may have success in increasing prices of some of its products ,which is an, eventual gain in the company. In the law of demand and supply, the company seeks to reach different markets with different products and at varied prices, which in my opinion, seem to stabilize the supply and demand equilibrium.

Works Cited

Deffree, Suzanne. IPhone 4 supply and demand issues could hurt Apple brand. New York: Cengage Learning, 2011. Print.

Zielenziger, David. “Apple’s Report: Annual Revenue Tops $108 Billion.” International Business Times. Ibtimes. 2011. Web.

Footnotes

¹ Deffree, Suzanne. iPhone 4 supply and demand issues could hurt Apple brand. New York: Cengage Learning, 2011.

² Zielenziger, David. Apple’s Report: Annual Revenue Tops $108 Billion. 2011. Washington : International business times.

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