Market for iPad

The iPad

The iPad First multi-touch screen tablet computer

developed by Apple Inc. Announced in Jan 27, 2010. 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.

Citations

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