Business Economics Study Material

This study material covers various topics in Business Economics including price elasticity of demand, determinants of demand elasticity, rebranding strategies, macroeconomic concepts, and more.

Business Economics

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1: Microeconomics...............................................................................................................1
Examining why the price elasticity of demand is important for a firm like Apple at the time of
launching a new product.............................................................................................................1
Evaluating the main determinants of the price elasticity of demand for the Apple iPhone........1
Examining if Apple benefit in terms of revenue from reducing prices.......................................2
Evaluating the use of a perfectly competitive market model......................................................2
Examining the Apple’s rebranding strategy in order to support its brand position against
competitors..................................................................................................................................3
Part B – Microeconomics.................................................................................................................3
Describe appropriate supply and demand diagrams....................................................................3
European Union believed that data roaming charges..................................................................4
European Union have used a tax or subsidy in order to correct the market failure....................5
Social and ethical responsibility with regards to data roaming charges.....................................5
Part C – Macroeconomics................................................................................................................6
Describe the trends in the graph over time and comment on the recession periods...................6
Use the model of aggregate demand and aggregate supply to help illustrate why inflation
might be expected to accelerate when economic growth is rising..............................................7
Explain what is happening to key economic indicators since the UK referendum results of 23
rd June 2016................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business economics is referred to as the application of the theory which helps in
analysing the various business factors which tends to contribute to the various diverse
organizational structures. This study will include complete understanding of the price elasticity
of demand and its key determinants. Furthermore, this study is also very useful in evaluating the
Apple’s rebranding strategy. Furthermore, this study also includes various set of macroeconomic
concepts.
PART 1: Microeconomics
Examining why the price elasticity of demand is important for a firm like Apple at the time of
launching a new product.
The price elasticity of the demand is considered to be very crucial for the firm like Apple
because it helps the management of the organization in pricing their products of Apple. Price
elasticities of demand is one of the most effective approach which helps in determining the
responsiveness of the amount of quantity demanded associated with a particular set of goods and
services with the change in the price (Barnett, Ziegler and Byleen, 2015). The demand of the
product is considered to be in elastic if the consumers tends to pay any price for the product. On
the other hand, the demand of the product is said to be elastic if the consumer is only willing to
pay certain price for the particular product. Hence, it is very crucial for the Apple Company to
take into consideration price elasticity of demand at the time of launching of a new product. This
way it will help the Apple to identify how much price customers are willing to pay for the
particular product.
Evaluating the main determinants of the price elasticity of demand for the Apple iPhone.
When buyers are very sensitive to words price are considered to be elastic products and
when the buyers are not very price sensitive towards products are known as inelastic products.
The three determinants associated with the price elastic city of demand are the availability of the
close substitutes, the amount of time and the in the percentage of the consumers budget in order
to purchase certain goods and services. If the products tend to have higher degree of close
substitute products then people react strongly to the increase in the price of the Apple. Hence,
the price elastic city of demand for the Apple company product is considered to be very high.
The Apple products tends to have higher price elasticity of demand because even the increase in
the price of Apple gadgets will result in customers choosing different set if products. Moreover,
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the longer the period of time customers in turn might adjust to the price over a specific period of
time.
Examining if Apple benefit in terms of revenue from reducing prices.
Apple Company has launched the iPhone 11 at a price of $700. The sales within the first
year was estimated to be 10 million units. Subsequently, in the second year the price of the
iPhone 11 has dropped to $525. This eventually has resulted in the increase in the sales to total of
14 million units. The price elasticity of the demand is the percentage change in the quantity
demanded divided by percentage change in price.
The price elasticity of the demand= The percentage change in the quantity demanded /
percentage change in price
The price elasticity of the demand= 40/ 25
The price elasticity of the demand= 1.6
However, yes, the Apple is considered to be very useful in benefitting the Apple Company which
helps in increasing the revenue by the reduction in the price of the iPhone 11.
Evaluating the use of a perfectly competitive market model.
Apple Arcade is considered to be very effective because massively helping the developers
it helps in providing the best possible service to the customers. Apple Arcade is considered to be
as one of the most prominent strategy as it helps in evaluating the revenue streams from services.
Apple tends to focus on providing various range of subscription services associated with the
steaming video, music video and news. One of the biggest competitors of Apple are Microsoft,
Lenovo, HP, Dell, Samsung, Sony, ASUS, Google and Philips. However, Apple arcade is a
video game subscription which tends to have various range of games (Castillo-Vergara, Alvarez-
Marin and Placencio-Hidalgo, 2018). Hence, Apple Arcade has gained a competitive advantage
over their rivalry competitors. Perfectly competitive model is mainly associated with the various
number of models which is based on developing identical set of goods in order to meet the needs
in order to meet the needs and requirements of the large number of the customers. Perfectly
model is considered to be based on one of the most effective assumption where the large number
of companies focus on producing identical goods by the large number of customers from across
the globe. Examining the extent Apple’s rebranding strategy support its brand position against
competitors.
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Examining the Apple’s rebranding strategy in order to support its brand position against
competitors.
Apple rebranding its priciest iPhones as “Pro” models is considered to be one of the most
effective approach because it helps in positioning their brand against their competitors. Apple in
turn has rebranded the iPhone 11 at the utmost entry level option (Schmithüsen, and et.al., 2015).
Apple has added iPhone Pro among their most expensive models in order to gain attraction of the
customers and increase the sales of the company. This rebranding strategy is to departure from
the Apple’s earlier marketing strategy in order to give iPhone at a cheapest price. The rebranding
strategy of an Apple tends to focus on embracing the low priced iPhone which are used by large
number of people across the globe. The iPhone “Pro” is considered to be one of the most
prominent strategy which has been focused on the high end customers. Same strategy in turn has
been adopted by the s iPads by effectively launching the high end customers by offering iPad Pro
within the market. Moreover, the new high end Pro models which has been offered within the
market includes a triple lens main camera. It has gone up from 2 lenses from last year’s model.
The entry level iPhone which has been offered currently has a dual lens camera which has been
considered to be as upgrade version of the last year iPhone XR. Another one of the key
prominent approach where all the iPhones tends to include an ultra-wide angle lens for more
quality picture experience. However, the new ultra wide lens tends to take photos with wider
view when compared with the traditional phone cameras. The new rebranding strategy of the
iPhone pro makes it handy for shooting landscapes. However, the key competitor of the Apple,
i.e., Samsung’s Galaxy S10, which has been released this year also tends to include an ultra-
wide angle lens (Cucculelli and Bettinelli, 2015). The second lens on the entry level iPhone helps
the camera in making capable of shooting photos in a portrait and night mode. Portrait mode
helps in putting the picture’s main subject within sharp focus by softly blurring the background.
Part B – Microeconomics
Describe appropriate supply and demand diagrams.
There seems to be high degree of significant demand from the customers associated with
the data roaming charges. There seems to be high degree of plans and data service plan which are
very costly for the customers (Anderson, and et.al., 2016). The data roaming charges faced high
degree of significant amount of bills when returning home for sending texts, calls, images and
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downloading data. Customers has been travelling to places which states that there is an
increasing demand for the data roaming packaged which are very affordable to the customers.
European Union believed that data roaming charges.
The European Union tends to focus on bringing the people together and also making their
life easier. However, the end of the roaming charges is considered to be as a true European
success story (Svaleryd, 2015). European Union believed that data roaming charges was an
example of market failure. However, citizens who tends to travel travel within the EU will now
be able to text, call and connect with their mobile devices at the same specified price as to what
customers tends to pay at home. The European Union has focused on eliminating various
roaming charges is considered to be as one of the greatest successes associated with the EU
(Laubach. and Williams,., 2016). The European Union has managed to find appropriate balance
between the ends of roaming charges. They have also determined the need in order to keep
domestic mobile packages attractive and competitive.
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European Union have used a tax or subsidy in order to correct the market failure.
The European Union could use a tax or subsidy in order to correct the market failure.
Charging high degree of tax from the company which has been collected from the customers is
considered to be one of the most prominent measure which helps in correcting the market failure
(Rocha, Carneiro and Varum, 2015). A subsidy is considered to be very useful in encouraging
high degree of supplies which is relevant to increase the output for the offsetting of the
production loss or cost. The subsidy helps in offering wide range of data roaming services to the
customers which helps in correcting the market failure.
Social and ethical responsibility with regards to data roaming charges.
Business ethics and social responsibility is considered to be one of the most prominent
approach which helps companies in carrying out their business within the appropriate measures
which is very useful for the well-being of the society (Business Ethics & Social Responsibility:
Definition & Differences, 2020). One of the key ethical responsibilities associated with the
business is to include the behaviour of the form which has been expected by the society by not
going against the law. Providing relevant set of data to the customers companies being interested
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by the valuable data is one of the most effective business at the responsibility and social
responsibility associated with the data roaming charges (Ward and Begg, 2016). The company
must focus on protecting the personal information of the customers. They in turn must also tend
to provide high degree of network to the customers and various range of data services at an
affordable price.
Part C – Macroeconomics
Describe the trends in the graph over time and comment on the recession periods.
Interpretation: The real consumption expenditure within the UK has been increasing at an
incraesing rate from the year 1995 till 2018. In the year 1995, the 175270 million was the real
consumption expenditure in the quartere 1. However, it has significantly increased to 294,789
million in the fourth quarter of 2016.
Interpretation: The Gross Domestic product within the UK has been increasing at an incraesing
rate from the year 1995 till 2018. In the year 1995, the national currency was 191, 241, 000,
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0000 was the Gross Domestic product in the quartere 1. However, it has significantly increased
to 341, 502, 000, 0000 million in the fourth quarter of 2019.
Use the model of aggregate demand and aggregate supply to help illustrate why inflation might
be expected to accelerate when economic growth is rising.
Aggregate supply is referred to as the total quantity associated with what an organization is
going to sell at a specified price within economy. On the contrary, aggregate demand is referred
to as the total number of goods and services that will be purchased by the customers at a
specified price within economy (Gavurova and et.al., 2017). When the inflation rate tends to
increase, the real spending of an individual person tends to decrease because the value of the
money has decreased. Moreover, if the inflation is expected to rise in the mere future, then it
tends to eventually result in increase in the aggregate demand or shift of the aggregate demand
curve to the right. However, aggregate supply is considered to be as the total of all the final
goods and services which has been produced by an organization. Inflation is referred to as the
sustainable increase in the price levels of the goods and services. One of the crucial aspect
associated with the inflation is linked with excess aggregate demand. However, cost push
inflation is usually caused because of an increase in the prices of the various set of inputs such as
raw material, labour, etc. However, the increase in the various price of factors of production tend
to highly result in decrease in the supply of the goods. The cost push inflation tends to occur
when the overall price tends to increase i.e., inflation because of the increase in the price of the
inputs such as raw material and labour. However, the increased price of the factors associated
with the production eventually results in decrease in the supply of the goods. Inflation might be
expected to accelerate when economic growth is rising because high degree of inflation is caused
by the strong economic growth (Parker, 2018). However, the economy demand of the economy
tends to expand faster when compared with the aggregate supply. Higher growth results in rise in
the demand.
Explain what is happening to key economic indicators since the UK referendum results of 23 rd
June 2016.
The key economic indicators of the UK are growth in GDP, statistics of the labour CPI
inflation, Balance of payments, Household expenditure, Index of production, retail sales, etc.
Since the UK referendum results of 23rd June 2016, there seems to be rise in the inflation and
sharp reduction in the value of Pound which tends to make imports to United Kingdom
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expensive. There seems to be high degree of trade performance within the United Kingdom.
There seems to be high degree of pressure on various consumer facing firms because of the
slower growth in Gross domestic product (Neuberger and Räthke-Döppner, 2015). It also results
in the narrowing of the deficits because of the recovery of the VAT receipts. UK referendum has
led to unemployment rate at low and lower wage rates.
CONCLUSION
From the study it has been summarized that, the demand of the product is said to be elastic if
the consumer is only willing to pay certain price for the particular product. The Apple products
have higher price elasticity of demand because the slightest increase in the price of Apple
gadgets will eventually result in customers choosing different set if products. Perfectly model is
considered is stated as where the large number of companies focus on producing identical goods
by the large number of customers from across the globe. The rebranding strategy helps in
increasing the revenue of an Apple company. The European Union has focused on eliminating
various roaming charges is considered to be as one of the greatest successes associated with the
EU. It has been summarized that, one of the key ethical responsibilities associated with the
business is to include the behaviour of the form which has been expected by the society by not
going against the law and offering relevant packages.
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REFERENCES
Books and Journals
Anderson, D.R and et.al., 2016. Statistics for business & economics. Nelson Education.
Barnett, R.A., Ziegler, M.R. and Byleen, K.E., 2015. College mathematics for business,
economics, life sciences, and social sciences.
Castillo-Vergara, M., Alvarez-Marin, A. and Placencio-Hidalgo, D., 2018. A bibliometric
analysis of creativity in the field of business economics. Journal of Business Research, 85, pp.1-
9.
Cucculelli, M. and Bettinelli, C., 2015. Business models, intangibles and firm performance:
evidence on corporate entrepreneurship from Italian manufacturing SMEs. Small Business
Economics, 45(2), pp.329-350.
Gavurova, B and et.al., 2017. Predictive potential and risks of selected bankruptcy prediction
models in the Slovak business environment. Journal of Business Economics and
Management, 18(6), pp.1156-1173.
Laubach, T. and Williams, J.C., 2016. Measuring the natural rate of interest redux. Business
Economics, 51(2), pp.57-67.
Neuberger, D. and Räthke-Döppner, S., 2015. The role of demographics in small business loan
pricing. Small Business Economics, 44(2), pp.411-424.
Parker, S.C., 2018. The economics of entrepreneurship. Cambridge University Press.
Rocha, V., Carneiro, A. and Varum, C.A., 2015. Entry and exit dynamics of nascent business
owners. Small Business Economics, 45(1), pp.63-84.
Schmithüsen, F and et.al., 2015. Entrepreneurship and management in forestry and wood
processing: Principles of business economics and management processes. Routledge.
Svaleryd, H., 2015. Self-employment and the local business cycle. Small Business
Economics, 44(1), pp.55-70.
Ward, D. and Begg, D., 2016. Economics for business. McGraw-Hill.
Online
Business Ethics & Social Responsibility: Definition & Differences. 2020. [ONLINE]. Available
through<https://study.com/academy/lesson/business-ethics-social-responsibility-definition-
differences.html>
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