Elasticity

Page 1 of 2

Elasticity

By | April 2010
Page 1 of 2
Apple I-PHONES - Elasticity of supply and demand
ABSTRACT
I-PHONE' ELASTICITY OF DEMAND
What determines price elasticity of Iphones demand?
Demand for Iphones – It seems like Iphone sales are above expectation and Apple can't meet current demand. People all over the world are enthralled and want to hold one of the advanced and sexiest products in the market. The degree of necessity or whether the good is a luxury – goods deemed by consumers to be necessities tend to have an inelastic demand whereas luxuries will tend to have a more elastic demand because consumers can make do without luxuries when their budgets are stretched. It's likely to assume that Iphone considered as a luxury and in an economic recession customers can cut their spending on Iphones. The cost of switching between different phones - there may be difficulties involved in switching between different phones. In this case, using Iphone, with its unique applications and software might involve with issues of transferring data from one phone to another. This also imply when moving from using another phone to Iphone. I consider this part for some extent as an insignificant. Summarizing, Iphone is a very unique product, differentiated but have some competitors. Price elasticity of demand is definitely not inelastic but not perfectly elastic. If prices go up significantly, there's no doubt that quantity demanded declines. I-PHONE' ELASTICITY OF SUPPLY

Price elasticity also affects supply. Products with an inelastic supply usually have a long lead time, with little power over the quantity produced. Hotel rooms are one example, because if there's a price change, hotel owners can't decide halfway through the growing season to provide more or less of rooms. On the other hand, products with a high elasticity of supply tend to come from industries that can change their production levels more quickly - for example, milk and dairy products. If we examine Iphone elasticity of supply we...