The explode of apple products in the market

Main article : http://www.afterdawn.com/news/article.cfm/2009/09/09/ipod_market_share_at_73_8_percent_225_million_ipods_sold_more_games_for_touch_than_psp_nds_apple

 

Nowadays, the brands of apple products become famous and famous concomitant with the development of technology. Apple products are totally success in creating various types of goods, such as IPod Touch, IPhone, I-pad and Mac book. In these times, it could be said that the highest selling rate of branded electronic products are Apple. Besides, apple products are not as familiar as now. In the beginning, apple products only have few types of goods that began with the IPhone and followed by the revolutionary of apple, such as IPod. In the middle of the development apple products, the company is also facing increased competition from Android in general and Samsung in particular. This condition is totally encourages the company to be plotting a major feature overhaul for the next products. It truly brings the apple products into a greatly success. This also prompts the increase in demand of apple products in global market, especially for IPod Touch and IPhone. Both of IPod Touch and IPod referred the elasticity, substitution goods and superior goods.

The percentages of IPod Touch and IPhone market share reach a peak to 73,8 percent. After that, the number of selling IPod in market attains to 225 million. It clearly seems that the demand of IPod Touch and IPhone products increase significantly. Most of people use IPod Touch and IPhone, because when people use Apple product, they have already had the good perspective about the quality of product. They choice a product which is the best according their perception.

In addition, Apple products provide the newest main feature such as safari, passbook, safari, accessibility, face time, maps, and etc. Then the trendy application such as, e-books, e-tunes, key-notes, I-movies, I -photo are provided in apple products. Both of main features and application provide the confines and luxuries gadget for people. Today, mostly people love portable gadget such as IPod Touch and IPod, because both of them are handy goods. Beside of that, the design of apple exudes elegance in every product. Generally without realizing, people make rational choices by comparing benefits and costs in consuming one goods. In this cases, there are also have the opportunity cost between the buyers and sellers. That is the particular reason why the demand of Apple products, especially IPod Touch and IPhone increase rapidly in the market.

In the other hand, the supply of Apple products, especially IPod Touch and IPhone are increasing faster above the expectation, because it delivers an opportunity cost for seller. When the demand of IPod reaches a peak, seller has powered to dominate the market. It brings seller as a price maker. This situation is evidenced by the revolutionary of apple products which continuously release a new various type of apple products.  The effortless of apple companies in increase the quality of their products clearly seem by the evolutionary standard of apple products. Apple companies have combined the various types of apple products with the newest application which is followed by the other products. When the companies succeed in promoting IPod Touch and IPhone to the most of people, the level of demand will go up that cause the increasing of prices. Automatically, the quantity supplied of IPod Touch and IPhone will be rising. The success of  apple products in supplying IPod Touch and IPhone also based on the marketing strategic which is used by company to influence their products.  Moreover, the increase in supply of IPod and IPhone exactly drop off the prices.

Another case, an increase in demand of both of electronic gadget raises the price and an increase in supply lowers the price. As the articles mentioned that the rate of IPhone selling reaches a peak to 30.000.000 assuming the higher rate of benefit and advantages of this product rather than the other electronic product. The increase in sales rate is encouraged by the increase in demand of people in consuming the IPhone Touch and IPhone. It offers an advantage for sellers in apple companies. The first of advantage which is obtained by company is the rising of their income. So the rising of price in both of products are totally uncontrolled. This condition also strengthened with the competitive market between apple’s company and the other company. In confronting with this problem, seller must control the price by establishing a fix price or administer price.

In this case, the increase in demand of IPod and IPhone will create a shortage. In overcome this issue, the price of IPod and IPhone must be decreased. Besides, when the supply of both gadget increases, it will cause the falling of price and the quantity increases. The increasing of demand and supply will not always affect the advantages in the market.

To clear up the explanation, we can see in the graph of increase in both demand and supply:

The graph shows the original demand and supply at the sales rate of IPhone Touch and IPod The original equilibrium price is around $ 15.000.000 and the equilibrium quantity is 30 million of total sales rate. As we can see, when demand increases, the demand curve shifts rightward. The equilibrium price rises to $ 30.000.000 amount of total sales rate. There is an increasing of quantity supplied, but no change in supply. Next, when IPhone and IPod produce to a new luxury technology, the supply of sales rate increases. Otherwise, the price falls to around $ 10.000.000, but the increasing of quantity reaches into 10. Then, as we can see there is a surplus in the middle of equilibrium. When the supply increases, the supply curve shifts rightward. The equilibrium price falls around to $ 10.000.000 a sales and the quantity demanded increases to 16,5 million. There is a rising of quantity demand, but no change in demand. Beside of that, there is a surplus of around 10 million total sales rate at $ 20.000.000 a total sales rate. In this situation, the apple companies can’t force consumer to buy more than their expectation. Furthermore, this condition is such a power of company to lower the price and move it toward equilibrium price. Company has no choices, so they cut the price until the price falls toward its equilibrium. It could be affected into the declining of surplus, because it increases the quantity demanded and decreases the quantity supplied.

In the conclusion, to solve this issue, I thought government should make a regulation regarding the payment of tax in each producing or consuming apple products. The ultimate effect would be reduce the supply of IPod Touch and raise the price to consumer, ideally making the price equal to the full cost of production society.

Cotton is dancing in the weather !

Main article : http://www.inc.com/articles/2011/01/clothing-start-ups-seek-solutions-as-cotton-prices-climb.html

 Nowadays, the level of demand in cotton increases significantly at the clothing market in New York. In the US, $120 billion of business revenue is stimulated by cotton. The price of cotton rises up until a half of the normal prices. Around 97 percent of US net domestic consumption of cotton was from imports, even though an estimated 27 percent of those cotton goods contained US’s cotton. In this era globalization, the demand of cotton reaches a peak at the same time with the increasing supply of cotton. The necessity of cotton raises concomitant with the development of fashion industry. In the newest period, cotton has been the necessity in human’s life. Mostly people use cotton for producing or consuming goods.

In figure graph is clearly shown that an increase in demand raises the price and decreases the quantity. Otherwise, an increase in supply lowers the price and increases the quantity. The quantity of cotton also increases when both demand and supply increase. In this case, when the demand of cotton in New York increases, it will be higher the price of cotton automatically. Then, when the supply of cotton increases, the price will be cheaper in New York.  However it would be impacted to the quantity of cotton.

Cotton is a basic crop that is a major input for the textile, agriculture, and food industries. Around 64 percent of cotton is used for apparel, 28 percent for home furnishings, and 8 percent for industrial products. It establishes an increasing demand of cotton in human’s life. In this era Globalization, the increasing demand of cotton is followed by the increase in supply of cotton. That also brings cotton into the competitive market which has a lot of buyers and sellers, so in this market there is no single buyer or seller can influence the price.

                        In New York, the demand of cotton increases significantly while, the plant growth was stunted because of bad weather. But the demand of cotton is continuously increase. The increasing demand of cotton will impact the substitution of price, the increasing of population, the decreasing of complementary price, the rising of income, and the increasing of future expectation. When the price of cotton rises, obviously it gives the opportunity cost and benefit to the other things. That condition also brings some advantages in our life. When the price of cotton increases, of course it increases the income of the country itself.  However, that situation also has disadvantages. Firstly, the demand of cotton will increase, secondly the substitution of price will decrease, thirdly it raises the complimentary price, then it decreases the income, next the population will be decreasing, then the future of expectation income will decrease, and the last the expectation of future praise will decrease.  According my opinion, the demand of cotton in New York’s market is facing a disproportion with the condition of environment. The articles mentioned that New York was faced the bad weather, while the demand of cotton in market was reached a peak. This condition affects the falling of future income expectation and the falling of future price expectation in New York’s Market. Beside of that the development of producing and consuming cotton isn’t in the market equilibrium, because neither quantity demanded nor quantity supplied doesn’t balance.

            As the articles mentioned that although the increasing of cotton price is reached a peak from $ 0,8 to $ 1,30, the demand for cotton remains go up. This fact strongly reduces the shortage because it decreases the quantity demanded and increases the quantity supplied.  Therefore, the increasing prices of cotton offer the greatly impacts of clothing industry in New York’s market. It’s because, the demand of cotton which increases through the possibility at equilibrium market.

In the other hand, it totally makes the increasing price of cotton above the normal price goods in New York. The rising prices of cotton also encourages the increasing of producing the clothe itself. Then a successful of New York’s Market in producing cotton by using rare productive resource involved the elasticity of supply.

If the price is set too high, excess supply will be created within the economy and there will be allocated inefficiency. At price P1 the quantity of goods that the producers wish to supply is indicated by Q2. At P1, however, the quantity that the consumers want to consume is at Q1, a quantity much less than Q2. Because Q2 is greater than Q1, too much is being produced and too little is being consumed. The suppliers are trying to produce more goods, which they hope to sell to increase profits, but those consuming the goods will find the product less attractive and purchase less because the price is too high.

                        As the articles reveal, “consumers tend to become acutely aware of price changes”. In the cases, it’s clearly shown that if the demand of cotton increases, it will appear a shortage that will encourage market to decrease the prices. To prevent the shortages, the market must increase the quantity prices. Obviously, it will decrease the demand of cotton automatically.

            In the conclusion, to deal with this issue I thought that government could intervene by increasing it is spending (which is an injection in the circular flow of income) and by decreasing income taxes, so consumers have more disposable income to spend on goods.

Iphone5 Demand Exceeds the Supply

main article:

http://www.examiner.com/article/iphone-5-preorder-demand-blows-away-supply

            After a successful sale on iphone 4s, apple company issued a new product that is iphone 5 with highly quality. As we know, apple is one of the famous brands. Many people are willing to buy and to have this new product because  apple product somehow seems more classy and luxurious than other products.

            From the information above, we can conclude that the demand for iphone 5 will be very high because buyers willing to pay a high price for the phone. As you can see at the article, iphone 5 preorders product sold out within 60 minutes in September 14^th which is 20 times quicker compared to the iphone 4s. Which means the quantity of supplied remains but the demand increases dramatically.

             First, I like to show you the equilibrium curve.

            The yellow point in the middle of the line cross between red line (demand) and blue line (supply) is the equilibrium. Equilibrium happens at any price for which the quantity demanded and the quantity supplied are equal. Economists also refer to equilibrium as market-clearing. Because quantity of demanded and quantity of supplied are same there is no shortage nor surplus in the market, which means that neither consumers nor producers are tend to change the price or the quantity, which is an important situation for equilibrium.

            As I said before, there is no change in supply but there is a high change in demand. Let me explain by this graph.

The demand curve shifts rightward from D1 to D2 which means the quantity demanded is increases and it cause shortage. If quantity demanded increasing, there is a movement up along the supply curve. The equilibrium price also rises from P1 to P2 and the quantity supplied will also increase from Q1 to Q2, so the sellers will get more profit.

The shift in demand causes a temporary shortage from q3 to q1 as the price related with the initial equilibrium of E1. This situation encourages the company (apple) to move upward along the supply curve (increasing quantity supplied, but not changing supply). Over several periods, sellers will increase their price to P2 and quantity supplied to Q2 until there is no more shortcomings at a new equilibrium point which is E2.

            The demand elasticity for iphone 5 can be either elastic or inelastic, it depends on what kind of people are we talking about. For some people such as teenagers and other people that follow the trend and style, the demand elasticity is inelastic because they think iphone5 is a necessity. But for other people who think that iphone5 is not so necessary, the demand elasticity is elastic because the desire of this particular thing is not so big and they probably will think other options to fulfill their needs by substituting it.

The demand elasticity also depends on people income, since iphone5 is considered as luxury product and  the price is quite high, people with high incomes probably will buy those iphone5 because they will still have money to buy some other things. But for people with average income they will think twice to buy this phone, because there will be some opportunity costs whether they decided to buy it or not. Opportunity cost is the best alternative sacrificed when you choose something, so if they think to buy this particular phone they will sacrifice other thing to get this product, maybe after they bought iphone5 they cannot have other expensive product since they choose the iphone 5. For people with low incomes, they probably will search another phone that has same functions with iphone but with lower price such as samsung or nokia. But, if iphone5 price is getting lower, people might buy this product if it fits their income.

            Apple Company is one of the oligopoly markets. To make it more understandable, oligopoly market is a market structure characterized by a small number of firms that each behaves interdependently. There are other companies that also will make a product that similar to iphone5, for instance, Samsung companies are producing SIII which quite similar to iphone5 and nokia also producing new phone which called lumia that similar to iphone or Samsung. As we know, Samsung and nokia are more cheaper than iphone, so why the demand for iphone5 still high? It probably because apple companies provide a better service and the quality of the product is better, and some people are already loyal to apple product.

 

Since iphone5 is the new output nowadays, people with the higher income willing to  buy this particular thing in higher prices. It can cause consumer surplus. Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service (demonstrated by the demand curve) and the total amount that they actually pay at the market price (P1). For instance, people with higher income willing to buy iphone 5 in very high price, let’s say the price they willing is $2000 while the market price is $850. So the consumer surplus is $1150.

Is the apple company considered efficient? The iphone 5 production can be regarded as underproduction because the demand is high but the supplies remain. Underproduction is the quantity supplied by the sellers are lesser compared to the quantity demanded by the buyers. Underproduction can also cause a market failure, that means apple company is regarded as inefficient company.

On the other side, black market can existed. Black market is a condition where the buying and selling of a products and services take place in an illegal manner. It can exist because the supply that produced is underproduction, the company is inefficient and arrangements between buyers and sellers. But it might just for temporary moment because apple is oligopoly market therefore many other companies as I told before will follow their product so the price will be decreasing sooner or later.

Normally, black market prices are lower than market price because black markets do not pay any taxes. But in certain condition such as shortage that is happening in the selling of iphone 5, the price can be higher than the normal price. In some countries, the iphone 5 even come out yet and if black market already have this product (iphone 5) they probably will sell it with higher price because the product is limited in that particular country. We can say that black market advantages the consumers since the prices is lower, and you will get it faster because the product is already there. But, it is unfair and if you get caught for buying from black market, you will be penalized for breaking the norms of trade which is illegal. So it is better to buy things at original market. Don’t go to black market and bought their stuff!