GROUP4


 * || Student's post || Teacher's comments ||
 * Project A || The development of the Ipad was first announced in January 27, 2010 by Apple as a platform for audio-visual media including books, periodicals, movies, music, games and web content. The first generation Ipad was released on 3rd April 2010 and 3 million was sold within 30 days of its launch. In the year of 2010 alone, Apple sold 14.8 million Ipads, accounting for 75% of the tablet PC sales . []. Following up on its predecessor’s success, the Ipad 2 was launched on 11th March 2011.

The price of iPad is determined by 2 factors – market demand and supply by price mechanism. Market demand is determined by the consumers and market supply is determined by the producers. Market equilibrium occurs at a price where quantity demanded is equal to quantity supplied. When price is below the equilibrium, there is shortage and there would be a upward pressure on price, driving it to equilibrium price. When price is above the equilibrium, there is a surplus and there would be a downward pressure on price, causing it to fall to equilibrium price. These whole process is called the Market Adjustment Process and is controlled by the signalling and rationing function. The demand for iPads has also resulted in Apple and many others to produce accessories. For example, there are various covers for the Ipad; there is the smart cover from Apple and the Ipad briefcase from ProTabStuff. These of which are the complements for Ipads. However there are also other tablets PCs like Samsung Galaxy Tab and Blackberry playbook. These are the substitutes of the iPad. These are substitutes as these tablet Pcs have almost the same functions like web browsing and media playing. Therefore these tablets can be considered as close substitutes. ||  ||
 * Project B || Demand refers to the quantities of a product that consumers are willing and able to buy at various prices per period of time, ceteris paribus. Demand represents intention to consume. The law of demand states the higher the price of a good, the lower the quantity demanded, ceteris paribus. The factors that we are going to look at which affect demand are non-price factors, i.e. income and taste.

Due to developments that affect the standard of living in major countries e.g. China and India, income has increased over the years (Evidence?) and this affects the choice and taste of people in developed countries (2 different factors. Assume ceteris paribus). Also, due to the increased level of development, more people have become increasingly tech-savvy (2 different factors. Assume ceteris paribus) and affluent, which will make them inclined towards buying luxury goods i.e. the iPad. This makes the iPad income elastic, as income increases, there is a more than proportionate increase in the quantity demanded of the iPad. There are too many factors explored here. When performing economic analysis, we assume the change in one factor, holding all else remaining constant. Ceteris paribus remember? How will Apple's marketing and pricing decision be affected?

Apple Inc. has taken upon the concept of advertising through word of mouth and concept advertising. Why undertake this strategy? Basis? This will make the demand for the iPad price inelastic and hence price can be increased without much decrease in quantity demanded. What's the link between this point and the earlier para? Intent?

As seen in figure one, when price increases from P2 to P1, there is a less than proportionate decrease from Q2 to Q1 in the quantity demanded. The producers when pricing the iPad will increase the price of the iPad to maximise profit.

Comparing the iPad with its competitors, or what is known as it’s substitutes, which include the Samsung Galaxy Tab that runs on Android OS, and tablet PCs produced by various produces e.g. hp, and the Amazon Kindle, which is an e-book reader, it is much more advanced technologically. The iPad has the Apple Apps Store, which has over 60 000 applications (apps) as compared to the Android Market which has merely 16. Apps which are widely loved and have been available on the iPhone Apps Store have been adjusted to support the iPad too, e.g. Angry Birds, a projectile game enjoyed by young and old alike. An app, iBooks, is also available in the Apps Store, which is an e-book, pdf and document reader, outshines Kindle, which can now be seen as obsolete as the iPad has a vibrant display and interactive “lifelike” page flipping. How do these constitute recent developments? How will it impact the market for iPad?

Based on these comparisons, if price of the substitutes decrease (Evidence?), there would be a less than proportionate decrease (Why? Basis? Evidence to support?) in the quantity demanded of the iPad. This shows that the iPad is cross inelastic. Impact on pricing and marketing strategies?

In conclusion, the price of the iPad is priced highly as compared with its original cost of production (Evidence?), but consumers are still willing to pay for it. Therefore due to the law of scarcity (I have never heard of this law), there is upwards pressure on the price, where Pe is the current price of the iPad.

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RE-EDITED VERSION

||  || Group members: Leo Shu Rui Fronia Tang See Ying Ting Terence Wong Alvin Tan Ng Shiuan Jun Ng Ting Hao
 * Presentation Materials || [[file:Econs webquest project.ppt]] ||  ||

Ms Quek: There are many unsubstantiated points raised in your report. While attempts are made to demonstrate theoretical economic analysis, the application of such analysis can be more directed in addressing the intent of the project. A common observation made in Project B is a description of the real world observations of the happenings in the market for iPad but no linkage to the focus of the project and no application of economic analysis, i.e, lack of focus in recommending marketing and pricing decisions that could be undertaken by Apple.