- Substitutability- The iPhone has many substitutes such as Android, LG, and Samsung phones, which means that customers can substitute their iPhone for one of these options, making the demand more elastic.
- Proportion of Income- iPhones, along with their plans and contracts, are expensive relative to the income of the consumer. So because it makes up a larger portion of the consumer's budget, the demand for iPhones will be more elastic.
- Luxury vs Necessity- You do not need a cell phone to live, so even though it is a nice item to have and many people would consider it a necessity, it's still a luxury good, and therefore will have a more elastic demand.
- Time- Over a year, you can switch the brand of phone, your carrier, or contract to get rid of your Apple iPhone. Therefore, over this time period, the demand for iPhones will be more elastic.
2. Demand Determinant #1
- Determinant- Tastes and Preferences- With the iPhone 6 recently released, many people are now switching to Apple because they have a new and improved product.
- Shift- Right
- Price- Increase
- Quantity- Increase
Demand Determinant #2
- Determinant- Expectations for future price (consumers)- In the last 12 months, with the release of the iPhone 6, consumers will expect the price to decrease as it has been on the market for a longer period of time. The customers will want to wait to buy the product because they expect the price to drop, so current demand will decrease.
- Shift- Left
- Price- Decrease
- Quantity- Decrease
Supply Determinant #1
- Determinant- Technology- Improvements in phone technology such as the iPhone 6 and ios8 will increase production, thus increasing supply.
- Shift- Right
- Price- Decrease
- Quantity- Increase
Supply Determinant #2
- Determinant- Number of sellers- Verizon, AT&T, Sprint, and other phone carriers will want to carry the iPhone, especially after the new release of the iPhone 6, so the supply will increase
- Shift- Right
- Price- Decrease
- Quantity- Increase
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