Intermediate Microeconomics

Running head: INTERMEDIATE MICROECONOMICS
INTERMEDIATE MICROECONOMICS
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INTERMEDIATE MICROECONOMICS
Table of Contents
Scenario 1: The $2,000 Bendable Phone: Hold ’Em or Fold ’Em..................................................2
I) How the companies will disseminate knowledge regarding different consumer groups the new
product will appeal to?.....................................................................................................................2
ii) How the companies will determine consumer preferences?......................................................3
iii) The number of consumers expected to purchase the phones.....................................................4
Scenario 2: Tesla Is Betting It Can Sell Cars Online, Without a Test Drive...................................5
Scenario 3: Renewable Energy Subsidies -- Yes Or No?................................................................8
Bibliography..................................................................................................................................11

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INTERMEDIATE MICROECONOMICS
Scenario 1: The $2,000 Bendable Phone: Hold ’Em or Fold ’Em
I) How the companies will disseminate knowledge regarding different consumer groups the
new product will appeal to?
The market of smart phone has seen the launch of folding smart phones by two of the
most notable companies in the form of Samsung mobile technology and the Huawei
Technologies Co. Looking into the concept of Theory of consumer behavior, the companies will
be willing to identify the preference of the consumer, budget constraint of the consumer and their
choices. On the other hand, the smart phone industry has seen five straight quarters where sales
have fallen. This is because, the users of the Smart phone companies finds less reason to change
their models. However, the folding technology of smart phones has not been proven in realistic
world, regarding the performance of the mobile phones. Now before bringing in new folding
technologies of the smart phones, the producers will have to analyze three main factors,
preference of the customers, budget constraint of consumers and their choice of goods.
Analyzing these three items is important in the sense that it will definitely allow the
companies to increase the marketing of their items in market. On the other hand, through the
improvement in analyzing these factors will acknowledge the fact that in order to understand the
above-mentioned factors the smart phone companies will be able to bring down the price of the
phones. The price of the commodities is one of the important factors that help in the
development of budget constraint. Now the preference of the consumers is obviously depending
on the price of the product. On the other hand, the price of Samsung smart phones is around
$1980 and the price of the products launched by Huawei Technologies Co. is around $2600
which is very high compared to First I phone models. The minimum cost of First I phone is

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INTERMEDIATE MICROECONOMICS
around $499 in 2007 and more models will come at $199. The market analyst claims the fact that
high price is going to make the market small. The vendors will ship less number of phones
compared to the amount that was shipped last year.
ii) How the companies will determine consumer preferences?
In order to identify the consumer preferences, the companies like Samsung and Huawei
will have to undergo survey that will definitely allow the companies to increase their market
participation rate. One of the best ways to understand the choice of the consumers is to indulge
the development of surveys that the companies will be willing to do in order to increase their
innovations. The methods of collecting consumer data can be done through the improvisation of
direct method of survey and through questionnaire method. It is important in the sense that
through the improvement in the questionnaire more amount of respondents can be reached
compared to normal method of survey. However, making survey in the market basket will never
reveal the axioms of consumer behavior theory.
Axiom like more is preferred to less and the participants cannot capture transitivity truly
due to the presence of fraudulent activities.