The demand for the new iPhone 7 plus has skyrocketed globally in response to its revealment on September 7th, 2016 as well as their one-week pre-order period. The demand for the new iPhone has shifted right due to two determinants: Buyer’s Preferences, and the Number of Buyers.
The consumer’s taste has changed due to the failure of Samsung’s Note 7, which had to be re-called back since their lithium ion batteries combusted when heated/charged for too long. Due to this safety hazard, buyers began to prefer the iPhone 7 plus since it did not combust into flames while it was charging (Or at all).
Also, the demand curve shifted right due to an increase in the number of buyers. Every year, millions of people line up early to get their hands on a new iPhone as soon as possible. However, this year the number of buyers have increased so much that Apple is having trouble supplying enough phones for this amount of demand. This may decrease their profit/demand in the long run and has already resulted in a shortage of iPhones. However, at the moment the demand is very high.
As a result, the demand curve shifts right. This increases the price and quantity as seen in the graph below.
The price of gasoline has fallen across several UK supermarkets, dropping 2 pence to 112.7p a litre. The price drop has been seen across three major UK supermarkets – Tesco, Asda, and Sainsbury, and is the second price drop in two weeks. Furthermore, the price of diesel has also fallen by a similar amount. The price drop follows a dip in the price of crude oil, which has dropped from $55 a barrel to $50.
In this case, the price has decreased because of an increase in the supply of gasoline. The supply determinant at work is cost of factors of production. Crude oil is an input that must be refined in order to produce gasoline, meaning it is a factor of production. Its price has fallen in the past month, so suppliers are experiencing less cost when producing gasoline and are willing to supply more.
The effect of the change can be seen in the supply and demand graph. The supply curve has shifted to the right, increasing the quantity and decreasing the price.
Wheat prices have hit a new record price at $10 a bushel as traders worry about tight world supplies. The United Nations called for aid to poor nations that are being pummeled by shrinking food stockpiles. In March, wheat contracts surged above $10.09 per bushel, before closing at $9.66 which is double the price of a year ago.
Wheat prices are jumping for a number of reasons, including bad weather in exporting nations such as Australia. Since there is bad weather in Australia, it becomes harder to supply the amount of wheat needed.This, combined with cropland being turned into corn for ethanol, makes the supply very low. Demand for wheat is also increasing in developing economies such as India and China. The supply determinant is change in number of suppliers (decrease), and the demand determinant is change in number of buyers (increase). These two combined factors result in the price of wheat increasing dramatically.
The selling price of potatoes in India have dropped by 64% since this time last year. 50 kg of potatoes costed ₹550 last year but now only sell for ₹200. This is due to a decrease in demand and increase in supply. The demand determinant is a decrease in buyer’s income/number of buyers as a result of demonetization and the supply determinant is costs of factors of production/number of sellers. India is getting rid of the Rs 500 and Rs 1000 notes and replacing them with a new Rs 500 and Rs 2000 banknote. Demonetization has caused a tighter supply of liquid capital (cash), leading to a drastic drop in consumer spending, especially in regards to cash purchases. As most transactions are cash transactions, there has been a significant decrease in the number of buyers. This shifts the demand curve to the left, with a decrease in price and quantity purchased. This year’s “bumper crop” (an unusually productive year) in Bengal has lead to an increase from 95 lakh tonnes to 1.50 crore tonnes of potatoes since last year. This increase in supply shifts the supply curve to the right, indicating a decrease in price and an increase in quantity.
With the demand curve shifting to the left, and the supply curve shifting to the right, there is a guaranteed decrease in equilibrium price.
Ridership increases on the Union Pearson Express as fares are slashed. The decrease in the price of the fare has led to triple the number of riders than before the fare cuts. Before the change in price, the ridership hovered between 2,000 and 2,200 a day but has increased immediately to 5,000 a day after the fare was cut and continues to grow at 6% a week with about 6,500 people using it regularly now. This is due to change in price. As the price of the fare decreases, the quantity demanded would increase as a new equilibrium price is set. As the suppliers are willing to provide more for a cheaper price, the quantity demanded rises to match that amount. A reason behind this decision would be supplier expectation. The suppliers, or Union Pearson Express, expected the drop in price to drastically increase the ridership, thus also netting more profits. Because the suppliers are willing to provide more service for a lower price, the supply curve shifts to the right, bringing the equilibrium price to shift right and down. In conclusion, the supply curve shifts to the right, the price drops, the quantity demanded increases.
The selling price of the Xbox One and Xbox One S was lowered by 17% of its release price from February 17th to 25th. Initially, they sold for $300 but between February 17th to 25th were lowered to $250. This is due to a decrease in demand. The demand determinant in effect was a fall in price of substitute goods. Sony’s PS4, a substitute for Microsoft’s Xbox One, offered a temporary price drop to $250 from $300 from February 12th to 25th. This shifted the demand curve for Microsoft’s Xbox One consoles to the left, resulting in a decrease in equilibrium price and quantity purchased. The supply curve did not change.
Link: AMD Ryzen New Benchmark Leaks, World Records, Intel Price Drops And What To Expect On Launch Day
The article describes the launch of Ryzen, a new line of computer processors by AMD. Previously, Intel had enjoyed a near-monopoly on processors as AMD did not offer anything close to Intel’s i-series. This meant that the equilibrium price of Intel’s processors was stable at a high price. However, after Ryzen’s release, the i-series of processors has dropped in price. This is the result of a change in a demand determinant, the price of substitute goods.
AMD is trying to compete not in performance, but in price. Since it performs similarly to Intel’s i-series, it is a substitute good. Furthermore, its low price means that consumers and computer manufacturers alike are more likely to purchase AMD over Intel, decreasing the demand for Intel processors. In response to the lower demand, retailers such as Amazon and MicroCenter have reduced the price of i-series processors by around 20%.