Project A
Take a look at our video that we had made to understand how the price of ipad is determined.
http://www.mediafire.com/file/k35674a7t1i04d9/project%20A.wmv
RESULTS IN
reduction in supply quantity and quality
of resources
Negative growth, lower output
(PRODUCERS)
RESULTS INPurchasing power
Unemployment, decrease in income,
loss of homes
More consumers unwilling and
unable to purchase iPad
(CONSUMERS)
More consumers rationed out of market
(rationing function)
Fall in demand
Effects on Marketing & Pricing Decisions
fall in quantity supplied > fall in quantity demanded**
Equilibrium point at which the demand and supply curve meets will shift
leftwards, allowing us to conclude that the price will increases.
**Although the Japanese may not be as willing to buy iPad due to their
situation , people from all over the world would still want to buy the iPad , the
demand for iPad would therefore not be greatly affected as compared to the
quantity supplied.
Introduction of iPad 2
Demand for iPad would decrease
Assumption: Consumers prefer substitution goods such as the iPad 2
since it is newer and better than the ipad
(CONSUMERS)
Introduction of iPad 2
Decrease in quantity supplied of iPads
Due to fall in demand for iPad, producers
channel resources to the production of the
iPad 2 instead of iPad
(PRODUCERS)
Effects on Marketing & Pricing Decisions
Fall in Demand > Fall in Supply**
According to the curve, the equilibrium point will move leftwards , allowing us to
conclude that the equilibrium price decreases.
**According to the Marginalist Principle, it would be rational for consumers to purchase substitution goods (iPad 2) than the iPad. This is due to the fact that the satisfaction gained from consuming an additional iPad < cost paid for that additional iPad. Thus, fall in
demand would be greater than fall in supply
Creditswww.businessinsider.com/japan-supply-chain-20111-3