Analysis on Economics 2022

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Author Note

1ECONOMICS
Table of Contents
1. Introduction..................................................................................................................................3
2. Analysis.......................................................................................................................................3
2.1 Analysis 1 – Apple’s iphone 8 and iphone 8 Plus Models...................................................3
2.2 Analysis 2 – Apple Ramped up Supply of iphone 8.............................................................3
2.3 Analysis 3 – iphone Market Share Increased......................................................................3
2.4 Analysis 4 – Premium Pricing for iphone............................................................................3
2.5 Analysis 5 – Higher Value and Premium Status of iphone................................................3
3. Conclusion...................................................................................................................................3
4. References....................................................................................................................................3

2ECONOMICS
Introduction
The market for smartphone is continuously growing and Apple is considered as one of
the dominant firms in the market (realmoney.thestreet.com 2020). This is due to its sleek and
attractive design. Additionally, Apple iPhones are a status symbol for emerging or developing
nations. This is expanding the market for Apple in developing economies. Thus, iPhone’s are a
luxurious commodity that grabs the market of many other firms.
2. Analysis

3ECONOMICS
iphone 11 pro
iphone 11
PPF
A
B
Q1
C
D
Q2
2.1 Analysis 1 – Apple’s iphone 11 and iphone 11 pro Models
Source: Samsung to Take on iPhone’s Popularity With Big Camera Overhaul
https://www.bloomberg.com/news/articles/2019-12-06/samsung-to-take-on-iphone-s-popularity-
with-big-camera-overhaul
Summary
The article explains the tradeoff between the economic resources for iphone 11 and iphone 11
pro. This implies that production of one product will be increased if less amount of economic
resources gets consumed for other product (Bloomberg.com 2020).
Figure 1: Opportunity cost for iphone 11 and iphone 11 pro using opportunity cost
Source: (as created by the author)
The figure 1 explains If Apple decides to produce iphone 11 pro from A to B, then the
company will face the opportunity cost for iphone 11 from B to A. In order to improve the
production of iphone 11 pro from Q1 to Q2, the company is required to reduce the production
of iphone 11 from C to D. There is a minor difference between the iphone 11 and iphone 11
pro, as stated in the article. The iphone 11 pro is bigger in size and relatively costlier than
iphone 11, however, the features are almost same. Hence, opportunity cost for the iphone 11
will greater than the iphone 11 pro and producers will likely to produce more iphone 11 rather
than inphone 11 pro.

4ECONOMICS
S1
S2
D1
Output of iphone11
Price of iphone 11
Q1 Q2
P1
P2
E1
E2
2.2 Analysis 2 – Apple Ramped up Supply of iphone 11
Source: Apple hits all-time high after announcing record holiday App Store sales
https://markets.businessinsider.com/news/stocks/apple-stock-price-all-time-high-app-store-sales-
record-2020-1-1028804503
Summary:
As per the article, the advancement of the technology has raised the production of the iphone 11
in the market. The introduction of the advanced technology has achieved around 90% profit over
the last year (GmbH 2020).
Analysis
Figure 2: Apple increases the sale of iphone 11
Source: (as created by the author)
This further has accelerated the customer demand, which in turn, encourages the manufacturers
to produce more iphone 11. In figure 2, the supply curve improves from S1 to S2 as the result of
technical advancement feature (Guide 2020). This results in the improvement in the total output
from Q1 to Q2 correspondence to decrease in the price level from P1 to P2.

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S2
S1
D2
Output of iphone 11
Price of inphone
11
Q2Q1
P2
P1
E2
E1
D1
2.3 Analysis 3 – iphone Market Share Increased
Source: IPhones are flying off shelves in China again
https://edition.cnn.com/2020/01/09/tech/iphone-china-sales/index.html
Summary:
Apple has experienced an improvement in the market equilibrium as a simultaneous
improvement in the demand and supply position. The article states that Apple manufacturer
will try to improve the technology in order to combat the trade challenge from the Chinese tech
companies. The evolving market share of the Chinese tech market over the international
market triggers a serious challenge to Apple producer. In this context, the company will
increase the supply.
Analysis
Figure 3: Improvement in market share reflects higher equilibrium position
Source: (as created by the author)
According to figure 3, the market price has been intensified from P1 to P2. It creates
excess demand in the mobile market the on the account of evolving demand for iphone 11
(Clare Duffy 2020). In order to grab this excess demand, the producer intensifies the supply
level from S1 to S2. Altogether, this leads the economy to the advanced equilibrium position
from E1 to E2.

6ECONOMICS
Analysis 2.4: Elasticity of iPhone in the smartphone market (Elasticity and Total Revenue)
Source:https://www.noted.co.nz/tech/tech-tech/noteds-top-10-smartphone-picks-from-
budget-to-high-end
Summary:
The article presents the top smartphones brand in the current mobile market. The
article presents the comparison among the different smart phones and the brands regarding
their features, specifications, quality, design and price. Additionally, it compares between the
new launches of Apple Inc., which consists of iPhone 11 and iPhone 11 Pro. This helps
consumers to compare among various brands and models before purchasing the required item.
Analysis:
The smartphone market is highly competitive in nature. A small change in price can
affect the demand for iPhone in the market. More, specifically there are various alternatives to
the new launches of iPhone 11 and iPhone 11 Pro. Therefore, the price elasticity of demand for
iPhone 11 is elastic in the market. Thus, there is a fall in total revenue with an increase in price
of iPhone 11. This is specific from the stiff competition provided by Samsung from the new
launches. However, in general demand elasticity of iPhone is price inelastic, that is, no matter
the amount of increase in price there is a small change in quantity demanded. This is because
iPhone is a luxurious commodity and a symbol of status for the society. Under such a scenario,
the total revenue increases with an increase in price.
Figure 1: Elastic demand and inelastic demand
(Source: Pindyck and Rubinfeld 2015)

7ECONOMICS
Analysis 2.5: Specifications of iPhone (Utility for consumers)
Source:https://www.mobilesportsreport.com/2020/01/wireless-outlook-for-2020-will-the-
iphone-11-drive-faster-wi-fi-6-adoption/
Summary:
The article indicates the specifications included in the new launches by Apple in 2019.
This include Wi-Fi 6. On the other hand there are certain features that are absent in Apple
iPhone 11 such as the CBRS system and inclusion of 5G services. However, Apple continues to
remain one of the top smartphone brands that is highly demanded across the world.
Analysis:
Apple iPhone is well known for its magnificent camera quality, privacy security and
faster services. Additionally, iPhone is a symbol of status for many and considered as a Veblen
good. This implies that with an increase in price, there is an increase in demand for iPhone.
Despite of all these, iPhone gives similar utility to consumers like any other smartphone in the
market.
Conclusion
Apple Inc. has recently launched its 11 series that is attractive for consumers due to the
new features added in the smartphones. However, the opportunity cost of iPhone 11 is less
than its 11 pro. Additionally, the demand as well as the supply of iPhone 11 is continuously
increasing due to its low price and similar features with 11 Pro. Thus, Apple is a valuable brand
in the world that is continuously growing in the mobile market.

8ECONOMICS
4. References
Bloomberg.com. (2020). Bloomberg - Are you a robot?. [online] Available at:
https://www.bloomberg.com/technology [Accessed 22 Jan. 2020].
Clare Duffy, C. (2020). IPhones are flying off shelves in China again. [online] CNN. Available at:
https://edition.cnn.com/2020/01/09/tech/iphone-china-sales/index.html [Accessed 22 Jan.
2020].
GmbH, f. (2020). Apple hits all-time high after announcing record holiday App Store sales |
Markets Insider. [online] markets.businessinsider.com. Available at:
https://markets.businessinsider.com/news/stocks/apple-stock-price-all-time-high-app-store-
sales-record-2020-1-1028804503 [Accessed 22 Jan. 2020].
Guide, T. (2020). Best Phones of 2019. [online] Tom's Guide. Available at:
https://www.tomsguide.com/best-picks/best-phones [Accessed 22 Jan. 2020].
Kapustka, P. 2020. Wireless outlook for 2020: Will the iPhone 11 drive faster Wi-Fi 6 adoption?.
[online] Mobilesportsreport.com. Available at:
https://www.mobilesportsreport.com/2020/01/wireless-outlook-for-2020-will-the-iphone-11-
drive-faster-wi-fi-6-adoption/ [Accessed 22 Jan. 2020].
Noted.co.nz. 2020. NOTED’s top 10 smartphone picks from budget to high-end. [online]
Available at: https://www.noted.co.nz/tech/tech-tech/noteds-top-10-smartphone-picks-from-
budget-to-high-end [Accessed 22 Jan. 2020].
Pindyck, R.S. and Rubinfeld, D.L., 2015. Microeconomics. Boston: Pearson,.
realmoney.thestreet.com 2020. Strong Demand for Used iPhones Is Helping Apple in Multiple
Ways. [online] Available at: https://realmoney.thestreet.com/investing/technology/strong-
demand-for-used-iphones-is-helping-apple-in-multiple-ways-15207735 [Accessed 22 Jan. 2020].