Apple has decided to cut production on the IPhone 5C and increase production of the IPhone 5S after one month of sales. Sources familiar with Apple have sited a lack in sales for the 5C, which they contribute to the phone being priced to high. Therefore, consumers have been choosing $100 5S, which Apple has asked its suppliers to increase production to keep up with demand. Companies familiar with the production of the 5C have seen a 20% fall in demand, the article says fall in supply, and an rise in the number of orders for the 5S. Consumers are buying the pricier 5S, which is outselling the 5C 2.5 times to 1. Some have indicated that the price gap between the two phones is to narrow, which no one at Apple seems to be concerned about because the 5S is offsetting the 5C lack of sales.
Looking at this article from an economic viewpoint, Apple has seen a fall in the demand of the IPhone 5C and rise in demand for the 5S. The same can be stated for producers of the IPhones, demand for making the 5C has fallen by 20 percent and demand has risen for the 5S. Since demand has fallen for the 5c, then supply will fall to and supply will rise for the 5S.
This decision is in Apples short-run, which they have realized variable cost is too high for the 5C with the amount of return they are currently receiving. They cannot exit from selling the IPhone 5C altogether because they are in the short-run and Apple will still incurs fixed-cost, such as production cost. All Apple could do is cut back on production to the point where marginal revenue equals marginal cost, or even temporary shutdown, but they cannot exit.
The best way to understand this is to look at it through a demand and supply curve. The curve will show us how apple is cur...
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...he future Dreamliner.
From an economic viewpoint, Boeing is seen increase in supply to keep up with the rise in demand. This rise in demand is seen because of consumers and airline companies wanting more fuel efficient jet airplanes. Boeing will be able to keep with this rise in demand since they have become efficient at production over the years. Boeing is also facing competition from foreign markets and other domestic airliners, which does make it or give it monopoly power when producing the 737MAX. Therefore, Boeing must have an accurate account of all variable cost that can occur in order to make a profit during the production of this new plane.
The following graph will show the supply and demand of Boeings new 737MAX airplane and it will represent an increase in supply.
Works Cited
“Boeing Says It Will Raise Production of the 737”
October 31, 2013
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