Group5-alvin,winnie,hanqi,yiwen,rachel

I feel that your answer lacks economic analysis, it lacks rigor. It's like your telling me just because dd for iPad falls, thus, it's not worthy to invest in marketing strategies? hmmm.. Don't quite agree there. ||
 * ~  ||~ Student's posts ||~ Teacher's comments ||
 * Project A || [[file:Project A - Economics.doc]] ||  ||
 * Project B || [[file:Project B.doc]] || The part on income, draw a dd and ss diagram and analyse the impact on both eqm p and qty. Interpretation of marketing decisions is not entirely accurate. Would prefer if you imagine that iPad 2 is your new creation rather than something that works against you. I would prefer if you've used another factor from the producer's point of view rather than the one on competitive ss. ||
 * Presentation materials || [[file:iPad Market2.ppt]] || Changes in price of related goods is from producer's POV?

Comments:

__**Project A:**__ The iPad first originated in April 2010. The price of the iPad is determined by the consumers’ willingness and ability to pay (demand) and the willingness of producers to produce the iPad(supply). To determine the gradient of the demand curve, a few factors will be discussed. Firstly, there are **quite a few substitutes** for the iPad such as the iPad2, iTouch, Samsung Galaxy Tab and netbooks. An increase in the price of iPad will cause a greater decrease of the quantity demanded of the iPad as it is a **luxury good** that takes a **large proportion of income spent**. Hence, demand for iPad is price elastic. Secondly, the iPad can be stored and transported easily. Thus, the supply of iPad is price elastic. At equilibrium point, price of iPad is at P1 and quantity is at Q1.

[Graph can be seen in document]

Complements for iPad include iPad covers, paid applications for iPads and iTunes. A decrease in the price of iPads will increase the demands for the complements. Hence, XED value is negative. Substitutes include Samsung galaxy tab whereby their XED value is always positive. An increase in the price of iPad will increase the demand of its substitutes.

For consumer point of view we have taste and preference of consumers. When iPad was launched many wanted it as a luxury good. However, recently, iPad 2 was introduced which had better features (better screen resolution) than iPad. Consumers now prefer to have an iPad 2 as it is better than an iPad. As such, consumers cast lower dollar votes for the iPad and the demand of iPad would decrease. This will signal producers to reduce the quantity of iPad supplied. As a result, there is a decrease in equilibrium price and quantity of iPad.
 * __Project B:__**

Secondly, the income of consumers. The earthquake in Japan has caused massive damage to the cities. Locals are now struggling to meet basic needs and income of these people are low. With a low income, they are now demanding for necessities rather than luxury goods (iPads) To the right is Maslow Hierarchy of needs where Japan locals are fulfilling their basic needs (greatest importance at the bottom). As such, demand for iPad would reduce.

As for producer’s point of view we have cost of production. Conflict in Arab countries has caused oil prices to rise which result in higher cost of production. Total profit=total revenue-total cost. When the price of iPad is kept constant despite the increase in cost of production, total profit decreases. Producers, being profit motivated, would cut down on production as the marginal cost of production is more than the marginal benefit they would gain from producing an additional unit. Hence, supply for iPad will decrease, and the equilibrium price will increase from 0Q1P1 to 0Q2P2.

In addition, there is the changes in related goods. iPad 2 has been released in the USA on 11 March 2011. The iPad 2 has better screen resolution, two times more RAM and is lighter as compared to iPad. As a new product with its new features, iPad 2 prices are increasing. Since iPad and iPad 2 are in competitive supply, producers will allocate more resources to produce the more iPad 2 as it is more profitable to do so. The quantity of iPad supplied fall and this resulted in a lower equilibrium price and quantity.

Recent developments have caused the demand and subsequently the supply of iPad to drop. The market of iPad is slowly reaching saturation. Based on the graph below, iPad life cycle is near the decline stage. After reaching its optimum point of sales (saturation), it will start to decline due to changes in consumer’s taste and the presence of better products. **Thus, we should decrease prices of iPad to increase current sales of iPad**.

**Marketing iPad would be irrational in view of iPad 2 and would be costly as well**. Producers should discontinue producing iPad as in time to come; it will not be profitable to do so. In conclusion, the market of iPad would slowly decline with the decreasing demand for iPad. Producers should move away from iPad market and perhaps step into the iPad 2 market, which is the improved iPad.

*Diagrams and graphs can be viewed in document

Credits (Websites)

[|www.wikipedia.com]

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[|www.google.com]

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Kimberley: I think we shouldn't compare iPad and iPad 2. iPad 2 is only an improvement of iPad, and iPad is no longer in production if iPad 2 is released. They are both from the same company, and the iPad 2 is obviously an improved version of iPad, thus they cannot be compared in the market as more people will more like go for the iPad 2. iPad 2 should be considered a method that Apple used to ensure that the iPad remains competitive in the market.

Alvin: Yup. But by comparing with iPad2, then can we understand about APPLE's mindset. Since iPad is only produced by APPLE, there is monopoly of the entire iPad production so it is vital to compare with its products to see what is APPLE planning to do. So since APPLE release iPad 2, we can infer that APPLE feels that iPad is no longer going to be profitable in the long run.

evonne: how is oil related to the ipad?

jovina: i don't really see the link between oil and ipad. and for the income part about japan, it is only one country will it really affect that much? other than that you all did a great job!!!:)