Supply and demand Essay

Customers’ use of goods is greatly affected by fluctuations in the demand and availability of the commodity offered to them (Varian, 2014). These shifts are caused by a variety of causes. This paper discusses each of these influences in detail, demonstrating how they have affected both the demand and availability of the iPhone industry globally.
Factors Influencing iPhone Demand
Price is often regarded as the most important factor influencing the extent at which a commodity is consumed. As a consequence, an increase in price typically leads to a reduction in demand for the commodity. For eg, the cost of an iPhone is high as compared to smartphones from Samsung and Microsoft. It has led to a decrease in its demand as most of the clients have opted for cheaper and affordable phones which are of similar quality to that of the iPhone.

The competition also plays a major role in the demand for iPhone. Increased smartphone providers in the market such as Microsoft, Huawei, Samsung, et al., which offer better deals to the customers in comparison to Apple Inc. has significantly provided substitutes to iPhone thereby reducing the customer base of the American tech giant. Through this, sales revenues have plummeted as a result of reduced demand for the product.

Factors Affecting Supply of iPhone

Supply of iPhone has equally gotten influenced by several factors such as the cost of production, price, government policies et al., A high cost of production leads to a low supply of goods and vice versa. Apple Inc. will be forced to supply less of their iPhone in the market if at all the cost of producing the smartphones is higher than that of the market price. In the case that the cost is low, there will be an increased supply of the product in the market.

Price plays an integral role in the supply of commodities. An increase of it leads to an increase in the supply of products. In the case that there is speculation about the future rise in prices of iPhone, the present supply of the commodity would decrease due to the profits expected from its sales in the future date.

Government policies such as fiscal and industrial policy significantly influence the supply of commodities (Cowen & Tabarrok, 2015). An increase in on excise duty would reduce the amount of company supply of a given product as compares to when there are lowered rates. For example, the increased benefit of a tax break that Apple has had from both the Chinese and Indian government has led to an increase in its supply in those regions.

Market equilibrium gets often noticed when the price of a commodity as well as services remains the same. The moment an increase in demand for a product gets often witnessed, the equilibrium prices rise. In the eventual a degrees in demand is witnessed, the equilibrium [rice falls. Regarding supply, an increased supply of a product in the market leas to a reduction in its prices whereas a decrease in supply results to a rise in the equilibrium price. For example, the increased demand for iPhone 8 the equilibrium price rose hence the phone selling higher than the other competitor’s products such as Samsung.

I anticipate changes in demand for iPhone to get witnessed in future. In most cases, its demand will likely drop in comparison to its present demand. Presently iPhone is facing stiff competition from technology companies like Samsung which has incorporated in their phones, most of the technologies that iPhone users. The sophisticated technology that Samsung has adopted for its phone manufacturing such as flexibility, water resistance, and high-resolution camera among other has increased its customer base. It will, therefore, be difficult for iPhone to dominate the market as initially was before the rise of its competitors.

Another factor that is likely to affect the demand for iPhone in future is the changes in the price of related goods. The introduction of cheaper smartphones such as Huawei and Microsoft has taken the millennial generation by storm. They have shifted their interest to more economical gadgets that they consider to serve the same purpose as iPhone. An increase in this trend would lead to a decline I demand of the iPhone hence affecting its entire supply.

Conclusion

In the closing remarks, the price gets considered as the most common factor that significantly affects the demand as well as the supply of a commodity. Organizations need conduct effective market survey to establish favorable proves of their commodities in comparison to that of their competitors before setting their prices. Factors such as income level of consumers play a role too in demand for a product. Regions where the occupant’s level of income is high, the demand for products such as iPhone increases given that these individuals have access to more finances as compared to locations where the individuals earn peanuts and probably live from hand to mouth. The supply of commodities is equally seen to get influenced by the cost of production. In the case that organizations expenses are higher than the commodity’s market price, its supply would reduce to minimize the high loss risks that the company may incur.

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References

Cowen, T., & Tabarrok, A. (2015). Modern Principles of Microeconomics. Palgrave Macmillan.

Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach: Ninth International Student Edition. WW Norton & Company.