Question

Analysis of price demand elasticity of I-phone products and the determinant factors of elasticity

Answer 1

l-phones are considered to be a luxury product for consumers. Considering the features offered at such high prices (as compared to competitors like Samsung), people prefer buying i-phones in order to show off their purchasing power of big brand like i-phones. The demand for i-phones is quite inelastic in nature because of its uniqueness and high brand value among consumers. This means even large changes in prices do not affect demand for i-phones much, making them inelastic in nature. The inelastic nature of the demand for Iphones is derived from the following factors: • Unique nature of product (unique operating software) Great customer service High brand value Global reach and distribution network • Competitors have different and less valued operating system (Android) Thus, the above mentioned factors affect the elasticity of demand for Iphones, making them inelastic in nature with respect to price.