The elasticity of iPhone 5

                                                                        Figure 3

The price elasticity of demand of a newly launched iPhone is difference depends on the places they were being sold.  For instance, iPhone that being sold in United States is considered as an inelastic demand. Why do we say that? Most of the Smartphone are known as luxury items in people’s life but when this view compared to the view of first world country, it’s different. In compare, the average incomes in the United States are higher than most of the country, and the price of an iPhone 5 are considered affordable for everyone. Therefore, the price elasticity of demand of an iPhone 5 in high income nations is considered as inelastic. On the other hand, the price elasticity of demand of iPhone 5 in countries like us, Malaysia are considered as elastic. From the figure 3, we can see that iPhone is considered as a elastic demand in countries that average income is not that high compare to the first world countries. Thus, the price elasticity of demand is elastic, the price of an iPhone 5 are considered expensive to us but the popularity of iPhone is still remained high so if the price of an iPhone is dropped, the demand would increase higher. 

                                                              

                                                            Figure 4

Frome the figure 4, the price elasticity of supply of an iPhone 5 is considered as elastic on the early period which. The determinants of price elasticity of supply are the amount that costs rice as output rises, which mean the lesser the additional costs of producing additional output, the more the firm will produce for a given rise. For your information, there an iPhone’s hype that slowly affected the community which mean people buying iPhone is no longer a want but is a need. This causes the supply to become elastic because the demand is too high that the supply are not enough fast to catch up even though the Apple Inc. has claimed that they have already increase the production of iPhone 5 than the iPhone 4s (Wikipedia, 2013).   However, when the product growth timeline of iPhone has moved to the decline period, the elasticity of supply of iPhone has become inelastic because the demand is lowered and shift to the left.