Market equilibrium
The article was originally taken from the Financial Review website which was published on the 21st of September regarding the launching event of Apple's iPhone 5 and its sales on that day.
Apple officially launched their iPhone 5 on the 21st of September 2012. There were a lot of people who queued up the day before in order to get their hands on the new gadget. With that being said, the quantity demand for an iPhone 5 was very high as proved in the article with about six hundred people queuing to get the gadget and each customers were limited to get a maximum of 2 phones only. When quantity demand exceeds the quantity supply, shortage will occur. This will force the price of an iPhone 5 to increase in order to meet the market equilibrium, if the price of iPhone 5 increases, the quantity demand will decrease. The quantity demanded and supplied will move upwards along the line to meet market equilibrium.
Unfortunately, the iPhone 5 considered as luxury good as the price of the product decreases, the quantity demanded for iPhone 5 will increase which will also lead to an increase in total revenue. With that being said, the elasticity of demand of the iPhone 5 will be elastic. In order to meet the market equilibrium, Apple would have to decrease the price of iPhone 4s. This way, the quantity demand of an iPhone 4s will increase as the price has gone down and the quantity supplied will also decrease due to lots of people purchasing the iPhone 4s. Again, graphically explained, the point of the quantity demand and quantity supplied will move downwards along the line in order to meet the market equilibrium. I predict that a black market will occur. In every production of an Apple product, people from other countries would purchase a few units and sell them at a higher price back in their own country as Apple has not officially launched the product in the respective countries.
The article above is prepared by Tham Zi Yang 0315350
You would need graphs to explain further. market equilibrium is reached when there is no extra surplus or shortage. when the price is high, there would be an extra surplus because consumer are not willing to buy due to the high price. then,there is two type of market equilibrium, price equilibrium and quantity equlibirium. Yours are too general. Please, do not touch about elasity. you already explained in the previous. only explain if got extra words. if not, what a waste of space. PS: bad english
ReplyDeleteYou would need graphs to explain further. and your market equilibrium is too general. there are two market equilibriums, price equilibrium and quantity equilibrium. emphasize on both of the equilibrium. Please, dont touch about elasticity if you are focusing on market equilibrium. it would be a waste of word counts. if you read your text book, then isnt a single elastic word used to explain the theory in that chapter. ps: bad english
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