Price Elasticity of a Good and its Impact on Current Supply and Demand | Economics

Running head: ECONOMICS
ECONOMICS
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Discussion
The paper aims to determine the price elasticity of a good and its impact on current
supply and demand. The chosen product is Apple’s iPhone 11. Elasticity denotes the degree of
change in price with respect to a change in price of product. It is determined by four supreme
factors like the nature of goods, availability of substituites, proportion of income spent on the
item and the time frame.
Apple has a huge brand value that makes it inelastic such that rise in price is greater than the fall
in quantity demanded of the product. Apple products are highly valued in the market and no
brand is considered as a percent substitute of Apple’s products. Thus, Apple products are unique
and does not have substitutes (Alfaro et al. 2019).
Rise in income leads to a rise in demand quantity. Demand becomes elastic in the long
run because in long run, Apple will be able to launch new products that will have a huge demand
(Mankiw, 2016). That is why demand is inelastic and demand increases when a new product is
launched in the market. Apple significantly increases its supply to extract super normal profits
from the sale of the product.

Reference List
Alfaro, L., Chor, D., Antras, P., & Conconi, P. (2019). Internalizing global value chains: A firm-
level analysis. Journal of Political Economy, 127(2), 508-559.
Mankiw, N. G. (2016). Principles of economics. Cengage Learning.