GROUP1


 * ~  ||~ Student's post ||~ Teacher's comments ||
 * Project A || Edited version:

The Newton MessagePad 100 is the first tablet PC by Apple. Several more Newton-based PDAs were then developed, with the final one being the MessagePad 2100, whose production was halted in 1998. After excellent sales of the iPhone, Apple decided to release the iPad. Good background info. In the market, price, quantity supplied and quantity demanded are controlled by Adam Smith’s “Invisible Hand”, which states that consumer and producer decisions would result in a final price where quantity supplied is equal to quantity demanded. This is at market equilibrium. Thus through rationing and signaling function, a price that is above the market equilibrium would result in a surplus and would be driven down to the market equilibrium. Likewise, a price that is below the market equilibrium would result in a shortage and would be driven up to market equilibrium. As a result, the price of the iPad is determined through the demand and supply for the iPad. Nice! Your group is able to highlight the correct economic framework that is used to determine market price of goods and services. The Samsung Galaxy Tab as well as the Motorola Xoom, are android tablets that have been recently developed and patented by other companies. As these serve the same function and offer similar features in comparison to the iPad, these products are substitutes, albeit imperfect substitutes for the iPad. Likewise, complements to the iPad would be equipment like earpieces and the iPad smart cover as well as the games and applications that can be downloaded onto the iPad from the applications store. Since complements like these would complement the iPad and increase derived satisfaction, it can be said that an increase in the price of the complements would result in a more than proportionate drop in the quantity demanded of ipad, due to the ipad and the equipment being very close complements. New dual core chips are complements? Sure about that? Complements need to be used jointly together to satisfy dd. Focus should be on how the devt of such complements would impact on dd for iPad, not the other way round. From this, it can be seen how demand and supply are affected by the markets of both substitutes and complements, showing us that the market of substitutes and complements also affect the price of the iPad.

References: 1) Wikipedia, the free encyclopedia. (2011). //IPad.// Retrieved from []  2) Quora. (2011). //Why are 2011 iPad competitors priced higher than the iPad?// Retrieved from [|http://www.quora.com/Why-are-the-2011-iPad-competitors-priced-higher-than-the] ||  ||
 * Prrject B || Edited Version:

Recent Developments Affecting Marketing and Pricing Decisions for the iPad:

Recent developments affecting the price of Apple products are the anti-iPad campaign released by Microsoft and the introduction of increased numbers of Android tablet computers such as the Samsung Galaxy Tab and the Motorola Xoom. Being substitutes, albeit imperfect substitutes, they give consumers a wider range of products to choose from. Cite your sources here to substantiate. and provide examples. Regarding the developments raised they all affect the DD for iPads. Any recent devt on the SS side?

Consumer’s Point of View – Increased Competition: With more tablet computers, there would be an increase in the number of substitutes for the iPad, making its demand more price elastic (Figure 1.1). Hence, with an increase in the price of the iPad, the consumers would switch to a cheaper substitute that offers the same degree of satisfaction, resulting in a decrease in demand. The signaling function would then signal to the producer that the consumers are only willing to pay a lower price, resulting in a drop in the price of the iPad. This would cause Apple to advertise the strong points of the iPad so as to increase its demand. Your group is right! Increased availability od substitutes does make PED for iPad larger. But does it jus alter the slope of the dd curve? How else would demand for iPad be affected?

Analysing the impact on mkt price and qty of iPad is not sufficient. The report needs u to focus on how Apple should react in terms of marketing and pricing decisions with the emergence of these substitutes and such anti-iPad campaigns.

Consumer’s Point of View – Microsoft Anti-iPad Campaign: IIn addition, the anti-iPad campaign would affect individuals and firms that plan to buy the iPad. Since the campaign highlights the weaknesses of the iPad, this would result in some firms either deferring the purchase or preferring the substitutes over the iPad. This is because as a firm, the choice of tablet computer is meant to increase efficiency of work so as to maximize profits. In such a case, the demand curve for the iPad would shift to the left (Figure 1.2). The market equilibrium would be at a lower price and quantity due to the signaling function that signals to the producer that the consumer is only willing to pay a lower price.

Producer’s Point of View – Increased Competition: The presence of more tablet computers means more competition. Hence, Apple would improve their iPad, which would distinguish the iPad from its competitors, making the substitutes more imperfect and the demand for iPad more price inelastic (Figure 1.3). In the short run, as the improvements would not have been made yet, the consumers would signal to the producers that they are only willing to pay a low price, resulting in a decrease in price of the iPad and hence a decrease in profits. In the long run, the iPad would improve and the demand for it would become more inelastic. Hence, there would be an increase in its price as consumers would be willing to pay more for the improved iPad, thus increasing the total profit. This constitutes marketing decision by Apple in reaction to increased competition from substitutes (dd factor). Impact of this strategy on Apple's profit? Are you sure that price of iPad will increase?

Producer’s Point of View – Microsoft Anti-iPad Campaign: The campaign would cause a decrease in demand for iPad as its flaws would be pointed out. Hence, Apple would address the problems presented in the campaign so as to reduce its flaws. This could be done by improving the iPad in the mentioned areas. Hence, the effect on the market for iPad would be the same as above. Good point! But it should be reaction by Apple from recent devt on the dd side. Not SS side. Dun understand the last sentence though.

Conclusion: In conclusion, the recent developments would affect the price at which the iPad is now set. However it is likely that through better marketing, Apple would be able to counter such problems, allowing them to increase the price of the iPad so as to maximize profits.

Valid reasoned conclusion. Good!

Appendix: Fig 1.1 - It will be easier to place your initial equilibrium of P1 at the intersection of the 2 cuurves (common starting point). Fig 1.2 - Which part of the report is this diagram trying to address? Highlight that in your report.

References:

1) Macworld UK. (2011). Report: Microsoft’s anti-iPad marketing strategy revealed. Retrieved from []

2) Wikipedia, the free encyclopedia. (2011). Samsung Galaxy Tab. Retrieved from []

3) Wikipedia, the free encyclopedia. (2011). Motorola Xoom. Retrieved from [] ||  ||
 * Presentation materials || [[file:Economics Webquest Presentation.ppt]] || Hmm...Be prepared to explain your diagram clearly during the presentation. ||
 * Market Structure Enrichment Activit || 2. Key features of the Chicken rice industry
 * Market Structure Enrichment Activit || 2. Key features of the Chicken rice industry

1.1 Large number of sellers/outlets Chicken rice is sold at numerous food stalls, food courts and restaurants in Singapore[1]. Each firm being one individual outlet is thus relative small. It has an insignificant share of the market and its actions will not affect its rivals to any great extent.

1.2 No barriers to entry or exit New stores can be opened without much difficulty. [2] There is thus freedom of entry and exit in the industry.

1.3 Differentiated (non-homogenous) products The non-homogenous nature of the good explains why the products from different outlets in the industry are close substitutes, but not perfect ones. This gives each outlet some degree of market power. They are thus able to increase their price without losing all customers. Product differentiation arises from:

a) Physical differences The taste of chicken rice produced by each outlet is slightly different from that by its rivals. [3]

b) Differences in sales conditions The location of the outlet, quality of service offered and physical environment of the outlets will influence consumers’ perception of the product.

2. How firms compete in the chicken rice industry Most chicken rice firms tend to compete through both price and non price competition. In price competition, some chicken rice stalls choose to set the prices of their products at a lower price as the demand curve for the firm’s are relatively price elastic. Hence, while most stalls set their prices at about $3, some like those at anana’s café set theirs at a lower price of $1.80[4] ( during the month of January). Furthermore some stalls illustrate product development as they choose to differentiate their products so as to decrease the substitutability of their products. Thus, their sales would not be affected as much by those of other chicken rice stores. For example, while most stalls would prepare their chicken rice following the normal recipe, some stalls like the Boon Tong Kee chain would instead differentiate their chicken rice by soaking their chicken in cold water before serving to make the meat tenderer.[5]

3. Equilibrium of a chicken rice outlet (a monopolistic competitive firm)

3.1. Short run Being profit-maximizing, in the short run a chicken rice shop attains equilibrium when - marginal cost (MC) = marginal revenue(MR) - MC cuts MR from below - Average revenue (AR)

The shop can earn supernormal, normal or subnormal profit in the short run.

3.2. Long run If existing shops are earning supernormal profit in the short run, new shops will be opened in the area. As these new firms enter, they will take some of the customers away from the existing shops. Each existing firm will now have a smaller market share. Demand (AR) curve shifts leftward and becomes more elastic due to existence of more substitutes. Supernormal profit is reduced. Leftward shifts continues until demand curve is tangent to the LRAC curve and normal profit is made.

In the long run, the firm will be producing at Oq* and charging a price of OP2. Normal profit is made, there is no incentive for new firms to enter. Hence long run equilibrium is attained. ||  || Group members: 1) Charlene Wee 2) Le Ngoc Mai 3) Seah Qian Yi 4) Soh Qian Wei 5) Gan Chin Boon 6) Huo Yong Hao 7) Lee Zheng Rong