1. Group 4

2.  Apple’s iPad 2

3. iPad(1)iPad 2 Processors1GHz Apple A41GHz dual-core Apple A5 Weight730g 613g GyroscopeNoYes Thickness13.4mm8.8mm Camera(s)12 Table 1.1

4.  As you can see from Table 1.1, the new iPad 2 is a great improvement from the older iPad.  iPad 2’s entry price in the market is £439 for the 16GB Wi-Fi model, and it is the same as the price of the original iPad.  Judging from this, let’s look at 2 different viewpoints  consumers and producers.

5.  Since the price of the iPad 2 is the same as the iPad(1), many would consider buying iPad 2 over the previous iPad because it is newer and improved.  Hence, the quantity demanded of iPad 2 will rise, and that of iPad(1) would decrease.  For example, many iPad(1) owners are selling their iPads online in order to purchase the newer iPad 2. Demand of iPad(1) Demand of iPad 2 X Price is constant.

6.  Furthermore, due to the advancement of technology, and the rise of many software giants, many other alternatives are released in the market.  Examples are: Samsung Galaxy TabMotorola Xoom Dell Streak

7.  Hence, as more consumers turn to alternatives, due to brand preference or better technical specifications, the demand for iPad would drop.  Furthermore, if the prices of the alternatives are cheaper, it would lead to an increase in the demand of these goods, while the demand of iPad would fall.

8.  Since the price of the iPad 2 is the same as the iPad(1), the price of the original iPad would have to be lowered in order to attract customers to buy it.  This reduces profit per unit cost, which would not spur producers to actively produce more goods.  Thus, the supply of iPad would fall.

9.  In addition, several key components in the iPad comes from Japan.  The iPad battery is manufactured by Apple Japan.  With Japan’s economy in tatters, due to the recent earthquake/tsunami, Apple may have difficulty obtaining batteries from Japan.  With lesser resources, production capabilities are impaired, leading to a fall in supply of iPads. S1S1 S2S2 R1R1 R2R2 Resources(from Japan) Supply of iPads