Thursday, October 24, 2013

Demand and supply of iPhone

The economic effect of iPhone 5 launch


Figure 2

On 21 September 2012, Apple Inc. officially launches their last iPhone, as known as iPhone 5. As we know that 24 hours before the launching of the iPhone there are already approximate 600 people lined up at the retail store in Sydney waiting for it to launch. In 24 hours after the iPhone had launched in several countries like Japan and Australia are sold out. This shows that there’s a shortage occurred in the production of iPhone 5. From the figure 2, we can see that the demand is increased and shift to right but the price of iPhone 5 is remained. 

At point A, the demand and supply are at the market equilibrium but because of the over population of the new iPhone the demand curve shift to the right but the price of iPhone is remained as every series of iPhone we have seen before. Thus, when the price is at the Point B, this causes a shortage between point A and point B, which mean that the supply is no longer can satisfies the demand. Moreover, when a shortage is occurred in the production, the price of black market had risen. Therefore with a limited supply of the iPhone 5 in the market, the black market started to sell the iPhone with an unreasonable price.  For example, all the iPhone 5 in China apple retail stores are sold out, then the phone were being sold in the black markets with approximately doubled price of an iPhone 5 which is RMB9000 (RM4675). 

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