The article Why Apple is experiencing another growth spurt by Vindu Goel speaks of the tremendous success that Apple Inc. is experiencing courtesy of the sale of new iPhone model. The stock of the company has increased by 5 percent from the increased sales of the new model and are expected to rise by 10 percent in 2018. This success is attributed to the companys knowledge of its consumers and their needs, hence manufacturing products that meet their demands. Their company has also increased the supply of iPads and MacBook Pros to increase its income and increase its market share. This has helped to increase the superiority of the company in comparison with other companies such as Google.
This article relates to the fourth microeconomic principle on incentives, whereby people usually respond to incentives and have a tendency to exploit opportunities to make themselves better off. The products from the company are usually sold at high prices, and this is an incentive for the company to manufacture more goods. The opportunity in this case is the fact that it has a large customer base, and thus it increases the variety of its products in order to appeal to this customer base. This is evident since it has increased the quality of its digital services such as App Store and iCloud, which has helped to generate more income (Goel, 2017). This has resulted in an improvement in the sales of these digital services in comparison to services by other companies. Another incentive has been made by the company which has reduced the cost of iPads and increased its features, so as to increase the demand for the product. His was due to the fact that the sales for the product were decreasing, but since the prices were decreased, many consumers reverted to buying the product.
This article also illustrates the sixth principle that states that markets move towards equilibrium. For equilibrium to be attained, the market supply should balance the market demand. The increase in demand for the digital services offered by the company has resulted in an increase in its supply. The company has invested in the digital services to try and balance the increasing demand of consumers (Goel, 2017). Similarly, the company has registered the rising demand for iPads and is working towards increasing the supply so as to balance the market forces.
The principle of people respond to incentives and thus exploit opportunities to make themselves better off is applicable in situations where the demand for a product has to be manipulated (Walker, 2015). Companies provide incentives by making products that are superior to those of their competitors so as to give their consumers an added advantage. This strategy encourages more consumers to purchase more of the product as it will make them better off.
The principle of the markets moving towards equilibrium is applicable in all market situations and is highly dependent on the prices of goods. In the event that the demand for a product rises, the market adjusts by increasing the supply of these products. When the supply decreases, the market increases the prices of the product so as to lower the demand and balance the market forces. As a result, the market situation is constantly changing so as to maintain the equilibrium of market forces.
Goel, V. (2017, August 2). Why Apple is experiencing another Growth Spurt. The New York Times. Retrieved from https://mobile.nytimes.com/2017/08/02/technology/apple-earnings-growth-iphone.html
Walker, E. (2015). Mankiws Principles of Economics Part 4: People Respond to Incentives. Empty Wheel. Retrieved from https://www.emptywheel.net/2015/07/28/mankiws-principles-of-economics--part-4-people-respond-to-incentives/
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