Market for iPad

The iPad

 First multi-touch screen tablet computer developed by Apple Inc.  Announced in Jan 27, Made available on the US market on 3 Apr.

How is the price of the iPad determined?  Cost price of manufacturing  Advertisement costs  Packaging costs  Distribution costs  Cost of research and development  Amount of money consumers are willing to pay

Developments related to iPad  Just shortly 28 days after its release, Apple Inc announced to have sold its one millionth iPad.  Release of iPad 2  Rise of other competitors such as Samsung, Acer, Motorola and Blackberry in market for tablet computers.  Apple has announced the drop in the price of the original iPad by USD$100.

Demand and Supply Price of the iPad Price of its substitutes

Price of iPad

Consumer’s point of view  Decrease in the price will cause an increase in the quantity demanded.  Income effect of a fall in price; a given income can buy more units of the iPad.  Substitution effect of a fall in price; consumers switch from relatively expensive substitutes to iPad.

Producers’ point of view  The decrease in the price will cause a fall in the quantity supplied for iPad.  Supply less of iPad to maximize profits.

Prices of substitutes

Consumer’s point of view  Price of substitute e.g. Samsung Galaxy Tab is priced at double the price of the iPad.  The fall in price will lead to a rise in quantity demanded for iPad; fall in demand for substitutes.  Ration consumers into the market for iPad.

Producer’s point of view  When quantity demanded increases, the quantity supplied must also increase, as according to the price mechanism.