Price Elasticity Essay

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Demand for mobile phones is the quantity of the mobile phones that people are willing and able to buy in a certain period of time, ceteris paribus. When the demand for mobile phones is price-elastic, it means a small change in the price of the mobile phones will cause a significant change in the quantity demanded of the mobile phones. Alternatively, if a large change in the price produces only a small change in the quantity demanded, then the relationship is inelastic. The price elasticity of mobile phones depends on a range of factors such as availability of substitutes. For example, when Apple first released their new product the ‘iPhone’ not too long ago, the technology was one of a kind. Other brands such as Nokia or Sony Ericsson did not have the same level of technology as Apple had at the time, so there were no substitutes for iPhone, and the demand for iPhone became price inelastic. This means that when the price of iPhone increased, the quantity demanded did not drop by very much because it was in such a high demand that people were willing to pay for it. However, nowadays we see other brands such us Nokia and…show more content…
For example, in developed countries, price elasticity of mobile phones is more likely to be inelastic because people need it in everyday life. People in developed countries need mobile phones to communicate and do business. They are also more well-off and able to afford mobile phones. In developing countries on the other hand, people may not need see mobile phones as a necessity because their main emphasis is money for food and achieving basic human necessities. They do not put much importance on mobile phones as people in developed countries do. Hence, mobile phones tend to be price elastic in developing countries, meaning a 10% drop in price of mobile phones may only lead to a 1% increase in its quantity demanded because people there cannot afford

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