However, taking the iPhone to use an example would be ideal since it created a relatively big hoo-hah with people from practically every age group, thus making it easier for our generation to understand and hopefully relate to. Firstly, we all have to be clear about what demand is about. The demand of a good refers to the quantity of a well-defined commodity that consumers are willing and able to buy at each stated price during a period of time, ceteris paribus. Factors that affect demand are as follows, number of consumers in the market, consumers' tastes and preferences, expectations of future prices and incomes, government policies, and last but not least, the change in the price of a substitute.
When Apple first launched the 2G iPhone in America, practically everyone was already outside Apple outlets waiting in line for shops to open on the 29th of June (release date of iPhone) just to be the first few to get their hands on the the newest gadget. The demand for the iPhone then was possibly at it's highest as it was definitely new in the market and in back in 2007, the iPhone was very scarce. We have learnt that scarcity is the main problem in Economics. In 2007, the demand for iPhones was high. However, the price of a 2G iPhone 2 years ago was not cheap either, due to the limited amount that was being released into the market. While some consumers thought it was overpriced or those who could not afford one, they considered buying a Nokia N95 that was being released then as well. This caused their opportunity cost to be the iPhone. Opportunity cost is known as the real cost of choosing one thing and not another and in this case, the iPhone as the latter.
The change in price of an iPhone then would be the main factor affecting the quantity demanded. If the price of an iPhone were to increase, less people would want to purchase it, thus decreasing the quantity demanded. However, since the iPhone could only be used in America unless jail broken, people all around the rest of the world could not use it. This would definitely lead to a decrease in demand. When the demand for the iPhone falls, the quantity demanded for the iPhone at every price level falls.
In 2008, Apple released a new and improved version of the previous iPhone- a 3G one. One which was able to work in any part of the world, not putting consumers through the trouble of jail breaking it. The demand for the new 3G iPhone therefore increased, leading to a increase in the quantity demanded. However, in Singapore, the supply of iPhones was not enough to meet the quantity demanded due to the excessive number of consumers in the market.
Simultaneously, Blackberry released their long anticipated Bold. Consumers' tastes and preferences definitely affected the demand for an iPhone however, the price of a Bold was higher than an iPhone and in that way, consumers would rather buy an iPhone instead of a Bold. This is a clear example of how the change of the price of a substitute (in this case the Bold) affects demand.
The use of the sale of an iPhone is a good example of demand and supply which is relatively easy to understand. It links the number of consumers in the market, tastes and preferences of consumers and the change in the price of a substitute which affects demand and supply.
elvinacheong
You have brought up several demand concepts as related to the context of iphones. Good application! You can also discuss about the relative shifts in demand. For example, for the 2G phones, it cannot be jail broken outside the US and its substitute was released thus demand is lower. Yet there is still an increase in demand overall – why? This would allow a more evaluative blog posting.
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