Business and Managerial Economics
Teacher: Ellie Semsar
Student Name: Robiul Islam
Student ID: B0261DADA0410
Personal computers are very imperative in the current world of nowadays. Today, PCs hold fabulous consequence. Several numbers of us will be thrilled without a computer, as it becomes a part and parcel of our daily life. Computer becomes a significant tool for keeping archives. For computer data analysis become tremendously easy and we can do it now in a single mouse click.
Now-a-days though the demand of personal computer is increasing rapidly but it price also falling day by day. There are some particular reasons of it, what is given underneath: * Production cost
* Price inflation
* Perfect competition market structure
* Technological improvement
* Inelasticity of product
Though, we can think that demand of the personal computer is going up day by day for its effectiveness. There is also a close relationship between population and demand in economics. Because, as the factor of demand we know that, if population goes up demand also go up. Population↑ = Demand↑
If population increase from P1 to P2 demand also increases from D1 to D2.
Production cost of computer: now most of the computer manufacturing companies don’t have big stores everywhere. Most of them are now selling their product by the website. They are selling computer by taking order at website. For that reason they don’t need rent a show room or a place to make a store. Before, all the companies used to have lots of employers to attach the computer products. But now everything is doing robot. So, the manufacturers don’t have to spend a huge budget for the employees. This reasons cut down huge amount of production cost. So, if they want they can also minimise the profit they earn each year. In economics we know that if the production cost rise supply goes down. But, if manufacturing cost like land, labour, capital, wages, interest etc. goes down supply goes up. It causes a shift to right in the supply curve. Price factors of production↓ = Supply↑
If production cost decreases from P1 to P2, supply Increases from S1 to S2. Also now-a-days there is lots of computer manufacturing companies. Like: Microsoft, dell, Acer, Toshiba they have vast range of computers. When there is many producers the price also goes down. Number of produces ↑ = Supply ↑
In market when the supply goes up price goes down.
Price elasticity of personal computer:
Price elasticity of demand: It is a amount used in finances or economics to demonstrate the receptiveness, or elasticity, of the amount demanded of a good or service to a change in its price. Furthermore, it shows the percentage change in quantity demanded in reply to a one present alteration in price if all the other demand become constant.
Price elasticity in demand is comes from the percentage change in quantity (%ΔQd) and in price (%ΔP). Personal computer is a perfectly elastic product. Because, this is not a basic need for people to have a personal computer. The basic need of the people is food, home etc. but, it can be vary to the living style of people. There are many manufacturers whose are manufacturing computers. So, for that reason consumers have lots of option when they intend to buy a computer. This made computer price down or constant. This product is in perfect competitive market. For this reason if any company increase the price customers will not buy that. They have lots of other options.
Perfectly competitive market structure: Perfect competition defines markets where, no one contestant is big sufficient to take the power of the market to set the price of a similar good. Because, in perfect competition the conditions are very strict. The number of perfectly competitive market is minimum. Perfect competition assists as a standard contrary to which to measure actual and incorrectly competitive markets....