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Learning Corner
Eco Lesson of The Week : Determinants of Supply and Demand
The intersection of the supply (upward sloping) and demand (downward sloping) curves is called the equilibrium pt. This point represents the price at which goods are sold and purchased at the market. However,
this equilibrium point may change depending on a shift by the curves. The curves may shift one at a time or at the same time both either upwards or downwards. An upward
shift by either curve would raise the price, while a downward shift would lower it.
What we want to know this week is what causes these shifts in supply and demand, called their determinants.
The Determinants of Supply
1. Costs of production
2. Profitability of alternate goods in supply
3. Natural occurences
4. Expectations of future prices
5. Profitability of goods in joint supply
6. The number of sellers
The Determinants of Demand
1. Tastes, fashions, preferences
2. The number and price of related goods
3. Income
4. Expectation of future prices
5. Population
By: Clay Bennet (The Christian Science Monitor, Boston)
By: Thomas Boldt (The Calgary Sun, Alberta, Canada)
Friday, October 12, 2007
That iPod...
That iPod... By Bea Lim
When Apple launched the first generation iPod back on October 2001, it marked the dawning of a new era in the portable music player industry. The Walkmans and the portable CD players that were once the dominant players in the market were almost instantaneously relegated to the sidelines. With the iPod’s initial storage capacity pegged at 5GB and 10GB models when first launched, the portable 700MB CD players miserably failed in comparison in terms of storage capacity and portability. Sony’s Walkman and Walkman-inspired players, on the other hand, were simply no match to the iPod’s digital music storage features. By October 2004, the iPod has already cornered 70% of America’s market for portable music players . Currently, the iPod is the best selling digital music player of all time, selling its 100 millionth iPod on April 9, 2007 .
With the huge and almost instantaneous success of the iPod, it was inevitable that controversies soon arose. Rival companies filed numerous patent infringement lawsuits against Apple Inc. Several dissatisfied customers used the Internet as a means to criticize the iPod’s flaws and its alleged monopoly of the portable music player industry. It is in this light that I would like to defend Apple and the iPod against the people accusing it of monopolizing the industry because in my opinion, Apple Inc’s iPod is in the midst of a monopolistic competition.
To begin with, the portable music player industry has no barriers to entry. In fact, with so many major players in this industry such as Sony, Microsoft, Creative, Samsung, it’ll be hard to argue that Apple Inc. has restricted entry to the industry to a select few. The technical know-how of building an mp3 player is widespread. The technical and legal barriers of a monopoly in this industry don’t even exist as can be proven by the countless mp3 players coming from China and around the world.
As far as I am concerned, Apple isn’t forcing these players out of the market. While some argue that Apple’s iPod and iTunes combination is slowly monopolizing the market, it is not the fault of Apple that the consumers embraced the iPod and iTunes to the extent that it has such a dominant share of the market. As a matter of fact, Apple’s iTunes has its competitors from rival companies the same way that iPod is competing against Microsoft’s Zune and Creative’s Zen. Owners of the Zune and the Zen can use different softwares to upload digital content to their portable players, thus rendering the argument of iTunes monopolizing the digital music upload software unfounded.
Apple isn’t forcing the iPod and iTunes down the throats of the consumers the same way as monopolistic firms do. The portable music player industry has a wide array of products that consumers can choose from- each with its own strengths and weaknesses. They come in various designs and specifications depending on the taste and lifestyle of the consumers. For example, Creative’s digital music player, the Zen, has an FM tuner, voice recorder, and an organizer that can be synched with Microsoft Outlook , all of which can’t be found in Apple’s iPod. Microsoft’s Zune, on the other hand, is priced way below that of its iPod counterpart, thus offering consumers a cheaper alternative to the iPod. These points further prove that contrary to that of a monopolistic industry, the portable music player industry is in fact enjoying a healthy competition from its major players both in terms of pricing and product differentiation.
To end my point, I think people are only quick to accuse Apple Inc.’s iPod of monopolizing the market because of its huge success without giving Apple credit for revolutionizing the industry. Apple deservedly succeeded because it was the first mover in the industry that offered consumers with an innovative and trendy product. The iPod was embraced by the consumers because of its revolutionary features and jaw-dropping design- and not because the consumers were left with no other alternative. In the Philippine context where social status is of utmost importance, Apple’s exclusive and high-end image serves as one of the driving forces behind its success here. Truth be told, the Zen and the Zune are putting up a big fight in their quest to cut into the iPod’s dominant hold of the market. The only problem is Apple’s iPod first caught the fancy of the consumers way back in 2001, and it still continues up to the present.
Name: Leontief Lovers Home: Manila, Philippines About Me: people wonder why we are called leontief lovers. it's simple, in eco, there is a canonical form of utilty and production function called Leontief Preferences / Technologies. In a two good/input world, you always would need the other good/input in order to remain satisfied/have the ability to produce... in other words, you will never substitute one good for another, you need to consume/use both goods at a fixed proportion at the same time... LIKEWISE, in our blog, WE WILL NEVER TRADE NOR SUBSTITUTE ECO FOR ANOTHER! See my complete profile
An economics professor and a student were strolling through the campus.
"Look," the student cried, "there's a $100 bill on the path!"
"No, you are mistaken," the wiser head replied. "That cannot be. If there were actually a $100 bill, someone would have picked it up."
Feudalism: You have two cows. Your lord takes some of the milk. Socialism: You have two cows. State takes one and gives it to someone else. Communism: You have two cows. State takes both of them and gives you as much milk as you need. Bureaucratic Communism: You have two cows. State takes both of them and gives you as much milk as the regulations say you should need. Bureaucracy: You have two cows. State regulates what you can feed them and when you can milk them. Then it pays you not to milk them. After that it takes both cows, shoots one, milks the other and pours the milk down the drain. Then it requires you to fill out forms accounting for the missing cows. Fascism: You have two cows. State takes both of them and sells you milk. Nazism: You have two cows. State takes both of them and shoots you. Liberalism: You have two cows. State dosen't care whether you exist, let alone your cows. Capitalism: You have two cows. You sell one and buy a bull.
PRICE IS IMPORTANT! (disclaimer: may be a little off-color)
"My Dear, would you go to bed with me for a million dollars?"
"Well, yes, I guess I would."
"How about $100?"
"What kind of person do you think I am?"
"My Dear, we have already established that. We are merely haggling over the price!"
When Apple launched the first generation iPod back on October 2001, it marked the dawning of a new era in the portable music player industry. The Walkmans and the portable CD players that were once the dominant players in the market were almost instantaneously relegated to the sidelines. With the iPod’s initial storage capacity pegged at 5GB and 10GB models when first launched, the portable 700MB CD players miserably failed in comparison in terms of storage capacity and portability. Sony’s Walkman and Walkman-inspired players, on the other hand, were simply no match to the iPod’s digital music storage features. By October 2004, the iPod has already cornered 70% of America’s market for portable music players . Currently, the iPod is the best selling digital music player of all time, selling its 100 millionth iPod on April 9, 2007 .
