Business Economics Study Material

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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