Microeconomic Analysis - Apple Inc.

MICROECONOMICS

MICROECONOMIC ANALYSIS- APPLE INC 1
The microeconomics denotes the study of the distinctive economic behavior
when the economic decisions are made. The study is comprised of the
evaluation of individual firm, consumer, and price of a particular
commodity, producer, or a household (Nakamura & Steinsson, 2013). Thus,
the operation of the concepts of the economics at a lower scale enables
a better understanding of the business or individual environment. The
following work is aimed at evaluating the microeconomic factors of the
company Apple Inc. in context of the most popular product of the same
that is the Apple iPhone. Yet another products of the company are the
computers, software, accessories and other electronic items. Thus, the
concept of microeconomics such as the market structure, competitive
pressure, barriers to entry in the market and others would be
evaluated, together with the role of the government.
The company Apple Inc. was established by Steve Jobs and
Stephen Wozniak in the year 1976. The company went on to become
one of the most successful companies of the United States, and is
widely known for its range of mobile phones and the computers all over
the world. In order to understand the various economic variables in
context of the chosen entity, it is first imperative to gain an insight
about the various market structures as explained below.
An economy can be characterized by different market structures.
There are four basic market structures namely the perfect competition,
monopolistic competition, oligopoly, and monopoly. The perfect
competition market structure refers to the structure where there is a

MICROECONOMIC ANALYSIS- APPLE INC 2
competition between a large numbers of small firms, selling identical
goods and there is no consumer preference. The monopolistic markets
is slightly similar to the perfect competition where there are large
number of firms competing against each other, but the goods sold are
slightly different. Thus, the higher prices can be charged by the virtue
of certain degree of control over the market (Carbaugh, 2016). The
oligopoly is the description of a market structure where there is a state
of limited competition and the market is controlled by the small number
of entities. The firms both by competing against each other and
collaborating with each other, gain the power over the prices, and drive
up the same to earn more profits. The monopoly market structure
denotes a situation where the market is controlled by a single firm and
since there are no alternatives, there are maximization of profits and
also high barriers to entry.
The market structure in context of the organization Apple Inc. can
be stated to be a vertical monopoly and when it comes to the Apple
iPhones, it is an oligopoly market. Vertical monopoly is a market
situation where the chain of the production is fully controlled by the
single firm itself, such as start from production to the distribution (Blair
& Kaserman, 2014). The oligopoly market structure holds true for the
iPhone because there is a competition for the company from the global
organizations like Nokia, Blackberry and Samsung in the area of the
smart phones (Varian, 2014). Yet, the consistent innovation has led the
company control the market to a certain extent and have introduced a
range of digital products, such as iPad, Apple Watch, iTunes store and