Supply, Demand, and Market Equilibrium

    The demand and the supply of a commodity are the two main factors that have the responsibility of enabling the management authority of a company to understand the market conditions. On the other hand, the price elasticity of demand or supply of a product is basically the desire and willingness of the consumers to pay a price for the goods or services offered. It implies that the price of the commodity and the quantity demanded have both a positive and a negative relationship. In this concept, it implies that a large percentage of the iPhone to be having a higher potential to enjoy the services offered by these products as compared to average consumer budget (McEachern, 2012).  Various factors such as product hype, highly devoted customer base, and so on, have been noted to have the ability of contributing to inelastic demand for the company.

                To begin with, consumers’ income as well as the amount that they are willing to spend on iphones manufactured by company affects the price elasticity of demand. It implies that the amount that potential clients end up spending affects its equilibrium price. For instance, in case the price of the iphones manufactured by the Apple Company increases with no increase in consumers’ income, demand will decrease. Consequently, in case consumers will not have enough time to adjust their demand behavior, the price elasticity of supply or demand of the company will be huge over a long period (Besanko eta al., 2011). 

    The availability of substitutes is another crucial factor that has been noted to have the potential of influencing the demand of Apple Company. Generally, with more substitutes from other rivals in the industry, it means that the supply or demand for iPhones from the company will be inelastic. Despite that, the uniqueness of the products that the company manufactures is the one that makes its price elasticity of demand or supply to be inelastic (Charles et al., 2010).

 

    Nevertheless, because of consumers’ requests, it is possible to experience the demand for iPhone increasing with time. Therefore, when it comes to supply, obvious it is the price elasticity of supply that will aid in measuring the relationship that exist between change in price and change in the quantity supplied. Such a nonprime factor will of course have the potential of switching the time required for customers to react to changes in price of iPhone (Marshall, 2009). As a result of that, it implies that any full adjustment of supply, demand, and price to a disequilibrium situation may not be instantaneous.  The management authority of the Apple Company should, therefore, have the ability of analyzing the time path that the supply of its products takes in order to respond to demand and vice versa.

    According to economics, the actions that consumers take are ultimately influenced by their expectations. In determining their economic behaviors, it is important for the management authority to anticipate what might happen in the near future so as to manage their price elasticity of demand and supply (Gillespie, 2007). Analyzing potential customer competitors, sales and purchasing power, customer satisfaction, and so on enhances the market equilibrium for the company’s products. In return, the costs incurred when switching between various carriers as well as the relatively high price of iPhones have also been noted to have the ability of dissuading first time potential buyers from purchasing those gadgets. In the long run, there will be an increase in market elasticity. Nonetheless, the Apple Company is still continuing to offer attractive prices for their products (McEachern, 2012). To be in the position of building a battle of price, it is important for the company to ensure that their pricing strategies are consistent with the strategic objectives of its establishment.

                                                    References

Besanko, D., Braeutigam, R. R., & Gibbs, M. (2011). Microeconomics. Hoboken, NJ: John Wiley.

Charles, W. L, Joe F.H, & Carl, M. (2010). Marketing. Cengage Learning Press

Gillespie, A. (2007). Foundations of economics. Oxford: Oxford Univ. Press.

Marshall, A. (2009). Principles of economics. New York: Cosimo.

McEachern, W. A. (2012). Economics: A contemporary introduction. Mason, OH: South-Western Cengage Learning.