Management Economics Report: Apple's Demand and Pricing Strategy

This report provides an analysis of Apple Inc., focusing on the demand and market equilibrium related to their products, specifically the iPhone 11 Pro. It examines the factors influencing demand, such as the price of substitutes and complements, consumer income, and consumer taste and preferences. The report also illustrates the elasticity of demand for the iPhone 11 Pro, considering substitution and income effects. Furthermore, it elaborates on the pricing policies employed by Apple, highlighting how these policies impact demand and market equilibrium. The analysis concludes that while the iPhone 11 Pro is a luxury good with demand less sensitive to price changes, consumer income and preferences play a significant role in shaping its market demand. This document is available on Desklib, where students can find a variety of solved assignments and past papers to aid in their studies.

Management
Economics A1

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Explain the business & its main product or service...............................................................3
TASK 2............................................................................................................................................4
Analyse the demand & market equilibrium that impact the demand of their goods..............4
TASK 3 ...........................................................................................................................................6
Illustrate the elasticity or more elasticity of demand for the given components....................6
Elaborate the pricing policies in the business employs..........................................................7
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Economics is the subject matter which understand the scarcity & use of resources,
manufacturing of products & services and the welfare within the given time. It is the great
variety of other critical problem of vital concern to the society. Management economics is the
subject matter that basically emphasis on solving various problems and making decisions so that
they can implement various theories of economics(Putraditama, Kim and Meador, 2019). Apple
Inc. is American technology organisation which focuses in buyer electronics software & also
offering the online services. Apple is the largest information technology company and generating
revenue of $365.8 billion. The company was established as the Apple computer company on
April 1, 1976 by Steve Jobs. This respective report will enlist the analysis of the organisation
and also evaluates the substitute and complementary goods for the organisation. furthermore, it
will illustrate the supply & demand in the target market & maintain the market equilibrium in
certain aspects.
TASK 1
Explain the business & its main product or service.
Apple Inc. is an multinational company which is operating in online services and
consumer electronics software. It is the largest information technology company. The company
went onto develop new computers with the help of innovative graphical user interface that also
includes the original macintosh. They are currently operating with 506 stores in 25 different
countries in the globe. They also operate in the retail store in 44 out of 50 states and also plus the
district of Columbia which is slightly over the half on them.
Chosen product:
For this respective report, iPhone 11 pro is the chosen product as it is the luxury products
of the company that are available in the market and based on the demand of the customers. It is
the premium product which is completely based on the income level of buyer and there is no
such impact with the variation in the price of the products.
Explantation of choosing that commodity:
iPhone 11 pro is the luxury product that is offered by Apple company so the elasticity of
demand change due to the variation in the other factors that is affecting the overall demand of
respective goods by which they can get the large customer base in the market.

TASK 2
Analyse the demand & market equilibrium that impact the demand of their goods.
Demand is defined to the choices or the desire of the people to buy the particular products
& services backed with the sufficient capacity to buy the product of the consumer to pay for the
specific products and services in the market. There is no such change with the variation in other
factor. Prices and the quality demand of given goods are inversely related to each other as when
the given prices of commodity increases then there is great down fall in the demand of respective
products and services in the target market. In context to Apple Inc., iPhone 11 pro, there is no
variation in the demand of the phone with the variation in its prices. These goods belong from
the expectation in the demand law and here the law of demand is not applicable for the premium
commodities. There can be variation with the change in the income of the buyer as higher
income of buyer tends to rise the respective demand for iPhone. Thus, the demand for premium
products increases an if the income of the buyer decreases then it leads to have the fall-down in
the demand of such goods in target market.
Equilibrium is defined as the states that the demand and the supply of good & services
are equal in the target market or can say that producer are offering the goods and services as per
the market demand so that they can maintain the market equilibrium(Vochozka, and et. al.,
2018). There is no such change due to the variation in the certain factors which usually impact
the demand of given goods includes prices of products, income of buyer, taste and preferences.
When taking th consideration of such goods, demand of such goods increases with the rise in the
overall income of the buyer so that they can have the products as per their choices. Whereas the
fall in the demand of such products is due to the lower lower income of the buyer as they are not
able to buy products and services in the target market. In relation to Apple, they are operating
their functions in premium goods as there is no major variation in the demand of the phone due
to variation in its prices as these are the goofs which comes under the expectations of law of
demand in the target market. Following are the aspects that impact the demand of goods &
services are given below:
 Price of substitutes- In context to luxury goods, there is no applicability of demand
curve due to the no variation in the demand of iPhone with the major change in its prices.
As the people are having sufficient purchasing power to buy the commodity. It is stated
that there is no substitute of goods which are showing the overall growth of the business

in target market. There is no such goods which are having the change in the market and it
shows the increase or fall in the demand of iPhone in the target market.
 Price of complements- These are the products that are not solely used by any of the
firm or the consumer as it always plays the supporting role to other products(Juutinen,
Tolvanen and Koskela, 2020). Charger is the complementary goods as iPhone is not be
used without the charger, it needs to be charged so it basically effect the demand of the
iPhone in the target market. When the given prices of complementary goods changed
then it reflect the demand of products in target market. Whereas, when the price of
charger reduces then the demand for iPhone tends to rise in the target market.
 Consumer income- It is the factor which is directly related to demand of the given
products as when the income of the buyer rise then it leads to rise the overall demand of
products in the target market. As the consumer always buy the goods when they are
having capacity to buy the particular goods to buy in an appropriate manner. Where as
downfall in the income of the consumer tends to slow down the overall demand of the
goods in the target market. In Relation to iPhone 11 pro, these are the luxury gods which
does not have any impact due to change in its prices as the people who are having good
income level always look for the goods as per their choices.
 Consumer taste and preference- Change is being based on the market trends and the
overall mind set of the people which can be change as change in the choices of the
customer. When the consumer is having the preferences to the particular goods and
services then the demand for such goods and services also increases. Whereas
unfavourable choices & preferences of the buyer tends to decreases the demand of
commodities in the target market(Vochozka and et. al., 2018). In context to iPhone 11
pro, when the people liking the android mobile phone then the demand for iPhone tends
to reduce in the market and they usually buy the products which giving huge benefits to
them. In relation to Apple, there are people who are liking the android phones then its
leads to decrease the demand of iPhone in the target market. As there are many featured
which is not offered by the iPhone so that people are not liking the phone and shift their
demand in the target market.
From the above discussion, it is being analysed that there is the major change in the
income level of the buyer which can leads to change in the overall demand of the premium goods

i.e., iPhone 11 pro. As it is the status symbol as people like to carry the expensive mobile
phones that is being offered by the people who are having good income level in the society. In
relation to Apple, they are offering luxury goods which are having huge demand in the target
market and there is no such influence of goods due to variation in the prices as the people are
having goods income level afford the goods such as iPhone 11 pro.
TASK 3
Illustrate the elasticity or more elasticity of demand for the given components.
Elasticity of demand refers as the various in the overall consumption power of
commodities due to variation in the prices and this can be down with the huge change with the
variation in the factor that is impacting the demand of goods in target market. The formulae for
the same is given below:
Price Elasticity of Demand= % change in Quantity demand / % change in price
It is the numerical expression that is impacted by the different economics by which they
can analyse the variability in the demand of products and services in the market due to change in
its prices. But other than this, there are products in which no change takes place in the demand of
goods due to variation in its prices(Terziev and Arabska, 2017). There is no significant change
in the other factors that are constant. There are good which are more elastic in nature due to the
change in the sustainable change in the demand for such goods. When there is the major change
in the demand of goods and services with the variation in its prices. There are few of the aspects
that enlist the elasticity of demand are illustrate below:
 Substitution effects: It is the factor when the big downfall in the overall sale of the
products, when the prices of substitute commodities fall down then the customer will
more to cost effective products. There is the hike in the prices of goods and the existing
firms are considering them in the target market. In relation to Apple, the company is
operating is premium goods such as iPhone 11 pro & there is no variation in the overall
demand of iPhone with the variation in the prices of given products in target market.
These are the products which are considered as the expectation of law of demand which
says that rise in the demand of premium products with the variation in the prices of
goods.

iPhone 11 pro is the luxury goods as the goods that are purchased by the people for their
status symbol and they are having the interest in purchasing iPhone backed with the sufficient
purchasing power to buy the particular products and services in the target market. Thus the
demand for iPhone 11 pro is inelastic as there is no such variation in the entire demand with the
variation in its given prices.
 Income Effects: It is refers to the earning of the people that is being eared by them by
doing any sort of work. It is defined as the variation in the demand of goods with the
change in the income level of the buyer by which they can have the better choices while
purchasing the goods and services as per their choices. This is completely based upon
how prices of products affects the real income of the buyer. Every person is looking the
better living standards so that they can have the goods life which is based on the earning
of the individual which is concerned for the quality of people by the people who can have
the good income level(Andryushchenko and et. al., 2019). In context to Apple, rise in the
income level tends to increases the demand for iPhone 11 pro as demand and the income
are positively related to each other.
Income percentage defined as the income portion which is being spend by the people to
buy the particular goods and services. These mobile phone are expensive one which require more
amount of money to buy.
Elaborate the pricing policies in the business employs.
There is been observed that several pricing policies are being undertaken by the
organisation and all of them are opted in order to manage and change the market scenarios. As it
is important that all the company should try to manage and change all such marketing nature and
pricing so as to make the effective changes in the prices impositions. It is being observed that
some of the main elements and factors through which the prices are been taken are through the
change in demand and also the cost is decided in various locations. Some of the aspects which
are used in order to manage the target market and the current market policy are ranged to cover
the target needs and working. All such aspects mainly focus on providing the pricing policy
through which the companies can manage effective nature and higher profitability. Some of the
main pricing policies are mentioned below:
 Discounted price and allowance- All those prices that are generally offered to customer
for managing the reward given to them for their bulk purchasing, buying any product in

off seasons, early payments, etc. This is majorly all such cash discounts which are being
given to the customers when they buy the bulk products.
 Geographical pricing: It involves the differentiated pricing policy which is used while
managing the so that they will manage the prices and adaptive locations. This manage
and helps to reduce the travelling cost, and also considers to set different prices in
commodities through demand in different area . It gains and provides the higher
profitability.
Conclusion
From this above analysis, it is summarised that demand and supply are the two most
important wheels in economy that helps in managing the development and enhancement. This
report as been given on Apple and its product Iphone 11 where it manage the law of demands
fails will make the no change in the products. Further there are so many pricing strategy that use
the business with effective price discounts. The pricing policy in which the products and the
discounts are been given for the products will help to gain more customers and also the target
markets.

REFERENCES
Books and Journals
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Juutinen, A., Tolvanen, A. and Koskela, T., 2020. Forest owners' future intentions for forest
management. Forest Policy and Economics, 118, p.102220.
Putraditama, A., Kim, Y.S. and Meador, A.J.S., 2019. Community forest management and forest
cover change in Lampung, Indonesia. Forest Policy and Economics, 106, p.101976.
Vives, A., Jacob, M. and Payeras, M., 2018. Revenue management and price optimization
techniques in the hotel sector: A critical literature review. Tourism economics, 24(6),
pp.720-752.
Andryushchenko, L. and et. al., 2019. Physical education service at university of economics:
Mission and progress policies. Theory and Practice of Physical Culture, (9), pp.3-3.
Demel, S., Mariel, P. and Meyerhoff, J., 2019. Job preferences of business and economics
students. International Journal of Manpower.
Lind, D.A., Marchal, W.G. and Wathen, S.A., 2017. Statistical techniques in business &
economics. McGraw-Hill Education.
Terziev, V. and Arabska, E., 2017. Social Entrepreneurship in terms of social values and social
impact. International Journal of Research in Management, Economics and
Commerce, 7(04), pp.41-46.
Vochozka, M. and et. al., 2018. Participating in a highly automated society: How artificial
intelligence disrupts the job market. Economics, Management, and Financial
Markets, 13(4), pp.57-62.