Last. This discusses the factors affecting variable costs and fixed cost and owe these change supply and demand for labor. This paper will discuss such factors about Apple and the phone. Apple Apple was established in 1976 by Steven Woozier and Steven Jobs. The company’s first product was the Apple l, which did not invoke much interest. Later in 1977 and 1978, Apple dbutted the Apple II and received greater popularity. By 1980 Apple had grown and had several thousand employees (Apple History, 2013).
In 201 3 Apple presented the Phone 5 with many capabilities Including retina display (an Apple only products a long battery life, an AY chip that runs the phone fast and smooth without going the battery life, and millions of APS ran only through Apple that can guard against virus’ with its own mallard (Apple. Com, 2013). Monopolistic Competition Apple holds the monopoly over certain products, like the phone, but does have competition from companies Like Samsung, who have the Android products. Apple works In the market structure of a monopolistic competition.
Other companies have similar products, but they have slight differences, making them competition. Consumers are required to make the decision on which product they want to purchase from which company. Much advertising exists to try to convince the consumers why they should or should not purchase a product from Apple and their competitors (Colander, 2010). There are a number of factors that may affect the supply and demand of the prices In the market that Apple operates. Consumers directly affect the supply and demand of a product, as their desires need to be met In order for them to purchase a product.
As consumers show the need for a certain product, like the phone, the demand curve will change, and move toward the right. When the price becomes lower on a product that consumers desire, the demand will sis. When a product has elasticity, it will steppes the slope of the curve. As products become out-of-date, and the desires of the consumers change, new products are released. When this happens, the demand curve for the old products shifts. If consumers do not feel as If a product Is priced correctly, they may not purchase It.
This will affect the revenue for the company, and potential consumers may go elsewhere for a similar, yet less expensive product (Colander, 2010). Issues and Opportunities The Apple phone is a brand known around the world and is sought out by almost al ages and varying levels of technological Intelligence. The phone is a unique brand this product is significant and thus the standard values to monitor this segment micro economically changes. First, take a look at Apple Inc. ‘s technological innovation. The company has two major hurdles that it continually must battle to be successful.
The first is the rapid advancement of technology in a monopolistic competition. The second is the expectations of its customer base. There is a significant amount of competitors within this market that are constantly dueling to be cutting edge or have the latest technology. The other is the customer base and their requirements to have a product that satisfies their needs and wants for his or her everyday lives. The uniqueness that Apple has is that they are a luxury product maker and thus must provide a product that tips the scale and compels one to want to purchase such a product.
Thus far, Apple clearly understands this dynamic and is doing very well and looks to be pulling ahead. The other consideration is price elasticity. This is a set of circumstances with some different rules and outcomes for a company like Apple. The product has such a huge following that it must be monitored very closely so that its elasticity falls within the normal ranges for such a product. The issue is that any other retailer in the segment does not match the consumption of the device.
Whereas its closest competitors may sell two hundred thousand units a day, similar analysis conducted reflects that Apple is selling approximately six times as many units. Therefore, the elasticity in the negative price change will reflect as profit for Apple. Last, there really is no availability for substitutes for the phone product. If one wants an phone, the phone is the only option. The other piece of uniqueness to the market, which does have an effect on elasticity, is addict ability. The smartened market regardless of brand is based on new technology and trends.
Variable Costs Apple is a well-known trusted and respected brand. The company is renowned for coming out with innovative products. Apple’s most sought-after product is the phone. Many companies do their best to make products that will measure up to the phone but somehow always fall short. Apple has to work hard to stay ahead in a monopolistic competitive market. They have variable costs Just like any other firm. When output increases, the variable costs must increase as well (Colander, 2010). There are many types of variable costs within a firm.
Some of these are output price, technological change, and supply of production inputs, technological improvement, and anything that affects the firm’s profit minimization (Boundless, n. D. ). These are factors affect variable costs that change the supply and demand for labor. For example, Apple releases a new phone once a year. Apple spends time finding ways to change or better the technology of the phone. This requires an increase in employees to spend time coming up with new ideas for next year’s phone. Furthermore, many customers anticipate a new phone release.
Apple must anticipate the amount of customers who want an phone by increasing their production. Therefore, Apple must increase their labor to supply the amount of phone needed for the demand of their customers. Apple’s labor demands depend on their customers’ needs. Customers demand a certain amount of supply of the phone. Apple must do its best to predict the supply required by their customers. After the company’s variable costs are reviewed, Apple fixed costs Apple is a company that continues to make revenue and profit. The phone itself brings Apple Inc. A substantial amount of revenue.
The phone alone generates approximately $650 in revenue (Eddie, 2013). Apple’s products, such as the phone generate great revenue and profit for the company, but there are many costs that Apple Inc. Face before they determine how much revenue and profit the company is making. Companies face different expenses and cost. The costs that a company faces are variable costs, as mention before, and fixed costs. Fixed costs are cost that are spent and cannot be changed in the period of time under consideration (Colander, 2010). It is a cost that does not change with an increase or decrease in the number of goods produced.
Fixed costs consist of expenses that have to be paid by a company, independent of any activity (Fixed Cost, 2013). Fixed cost that Apple Inc. Has includes the rent of price of the building. The building was purchased to start off the business; whether or not any product is produced the cost of the building does not change. Another fixed cost is the machines purchased and used to produce the phone and all other product that Apple produces. The machines that are bought with the intention of producing the Phone and products made by Apple are another fixed cost.
The demand for the phone may be high and possessing the machines to produce them efficiently is great. If the demand were to decrease of a new change is made that requires a new machine because the current one cannot do the Job. Then both machines are now a fixed cost, even if the older machine is not used any more it is still a cost for Apple. A few other examples of a fixed cost would be the insurance on the building, parts purchased from suppliers, and the executive salaries. Those are all costs that Apple needs to face regardless of how much Apple produces.
Recommendations As previously discussed, Apple is a company that even in these times is profitable, based on most of their products that make a good amount of money for many reasons. They make a high quality product and let them charge a high amount for that product. Another reason that they maintain a high profit rate is that they also control what their item is sold for; few companies can and do this. They tell the store what the item must be sold for and that is why you never see Apple items on sell. With all this there is not a lot to change to make things better but there are a few things that may help Apple some.
