Economics analysis

Economics analysis

Introduction

This paper will explore the world of two particular types of cell phones that are identical with minor features. Further, this paper shall demonstrate skills in using the tools of economics for decision making for the firm operating in the market economy to include supply and demand, elasticity of demand, consumer behavior and utility maximization, and the costs of production both short-run and long-run. Moreover, it shall demonstrate the ability to clearly present views in written and/or oral expression. On the web, I will research additional information about the A-Phone and the Pomegranate. The task below also requires me to draw graphs of supply and demands increases and decreases. When This paper provides an in depth analysis about the demand curve of an A phone, a clear understanding on what happens to the price and quantity supplied, equilibrium, and effects on government interventions with cell phones. 

Discussion

PART I

There is overall increase in income

There are various variables that may cause either shift in the curve or movement along the curve of demand. The most prominent variables that influences the demand curve are, taste, preference, income, price of substitutes, price of complementary goods, potential future price, demographics and population. When the income of the consumer increases, his willingness to purchase goods also increases, since now he has the ability to buy the goods. The relation between demand for a good and the consumer's income is positive. However, when the income increases, the demand curve for the A-phone will shift towards right.

There is an overall increase in income and people believe that the Pomegranate is now better than the A- Phone.

If there is an increase in income, and the substitute of A- Phone, which is Pomegranate is believed to be a better cell phone then the demand curve for the A - Phone will shift to left side.

The price of the A- Phone goes up when a flaw is found in the Pomegranate

When people will find that there is a flaw in Pomegranate, which was the perfect substitute of A- Phone, then the demand for A- Phone will increase. However, here the manufacturer took advantage of the current situation and increased the prices of A-phone. This way the demand curve of A-phone may shift to right, and also there will be movement along the demand curve due to increase in prices.

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