Supply and Demand Changes Of Verizon
Verizon has gone through many changes in the last few years. The communication industry is extremely competitive and this company would not have had a chance of forming at all, except for the government ordered breakup of AT&T in 1984. Their targeted areas of communication are cellular, paging and PCS services for corporate and individual customers. They have been trying to expand their business for corporate local goods and services.
The article I chose to report on is from an article published in 2003 by the New York Times. In this article they are forced to report a forecast for a lower profit due to a smaller demand from business customers and an increase in costs because of a new labor agreement. Demand is the amount of service the consumer is willing or able to buy at a given price. This short fall in business customers can be shown graphically as:
A change in price never shifts the demand curve. In this figure an increase in price results in a movement "up" the demand curve. The fall in the quantity demanded from Q1 to Q2 is sometimes called a contraction in demand.
The amount of demand depends on:
the price of the good;
the income of consumers;
the demand for alternative goods that could be used (substitutes); the demand for goods used at the same time (complements);
whether people like the good (consumer taste).
The Federal Communications Commission ruled to cut network access prices by putting a price ceiling on how much can be charged and made it easier for competitors to lease certain parts of their network at discounts. Also, there were some unpredicted expenses from higher repair cost because of bad weather and some changes in accounting for retiree health care benefits that should affect their market share price. Obviously neither of these problems can be resolved by increasing the price; therefore they anticipate a smaller profit than predicted. It is impossible to...
References: BizEd Website Graphs, retrieved May 26, 2005
Bloomberg News Service, The New York Times – Knowledge Network,
September 24, 2003 retrieved May 25, 2005
Gross, G. Nichols, R., (IDG News Service) PC World net article, retrieved
May 25, 2005. http://pcworld.about.com/news/Feb142005id119667.htm
King, Arnold, The Library of Economics and Liberty, Retrieved May 30, 2005
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