This year, I was looking forward to the latest iPhone release from Apple. I kept up with any news, watched Steve Jobs unveil the phone, and planned on preordering one the day preordering started. However, there were several economic factors that have prevented me from ordering the iPhone 4. Through week one’s assigned reading, I learned about the law of demand, the law of supply, and price elasticity.
The law of demand states, “Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. In short, there is a negative or inverse relationship between price and quantity demanded” (McConnell, Brue, & Flynn, 2009, p. 47). This happens with ...view middle of the document...
Apple needs to keep up with the demand and will continue to manufacture because the price is high and demand is constant.
At this time the iPhone’s price is somewhat inelastic. It has features than no other mobile phone currently has such as FaceTime (video calling), retina display, and HD video recording (Apple, 2010, para. 1 & 3). As mentioned previously, consumers purchased 1.7 iPhone units in just four days. They purchased the phone even though it cost $199 to $299. That is a significant amount of money. If these consumers are like me, then they and their significant other both wanted an iPhone 4. That is a purchase range from about $400 to $600 for two iPhones. That fact that people are willing to pay that even though they already have a perfectly good, albeit one-year-old iPhone 3GS shows that consumers were willing to purchase without much regard of the price and other circumstances I think that if AT&T were not subsidizing the price that this would be a much different situation.
In my experience, the iPhone 4 market is...
