Change In Quantity Demanded And Change IN COST Economics Essay

Computer systems are sophisticated machines using for handling business and other data directly into interpretation full or useful way. Computer systems are machines which having a distinctive and comprehensive record to say. Computers where huge machines which occupied a good one room but could only do limited computations. But little by little as the age passed by the size of computers becomes to lessen and reduce. Now computer systems are machines which micro in size and saturated in performance. The present day computers comprise screen, key table, mouse, recollection and processor. There are lots of of companies in the market, who producing different parts of the computers and set of whole systems. Little personnel computers called laptops are available now with different brands called apple, Sony, dell, Compaq etc.

It is more miraculous that while we discuss price of early pcs and latest pcs. It had been so costly that to buy a computer in earlier days. But the thing was there where no such a high usage or ingestion in earlier days and nights. Now the consumption and power of computers increased. The computer systems are primary need of business as well as professionals. There a situation arises that business cannot endure with no computer machines today.

In economic conditions, we can tell that the price tag on computers reduce while the demand for the computer systems increased. The customers are more in computer market and price of computer systems reduced. That means a lots of computers can be purchased in market with low priced. The main manufacturers of computers are apple, Sony, horsepower, Compaq, Toshiba, Dell. That's the reason the competition among different manufacturers is high and that caused to lessen the price up to the certain scope.

Price and demand relationship of computers

In case of computer systems, today

The price of personal computers are receiving down regardless demand is moving high. That means as the demand becoming more on pcs the purchase price becoming low.

Here is the question increasing that why it is being so?

The basic rules of economics is not satisfying this scenario.

Let check regulations of demand and offer now. As the basic law explains that whenever the demand for the commodity increases the price also getting high, so when the demand street to redemption price will fall. That presents there is a direct relationship between demand and price.

Law of Demand

Regulations of demand talks about the partnership between change in number demanded and change in price. It states that higher the price lower would be the quantity demanded in the market: and the lower the price, the higher would be the number demanded on the market. Quite simply, the law of demand says that the purchase price and variety demanded are inversely related, all other things being equal.

Assumptions' of laws of demand

1). Customer income level should continue to be constant in all times.

2). Tastes and desire of consumers shouldn't change.

3). Prices of other goods should remain constant.

4). No new replacement for the item.

5). There shouldn't be any expectation of price increase in future.

Price

Demand

The above diagram shows the connection between demand and price of the commodity as well. We can see that supply curve downward sloping from remaining to right.

(Expert Abdul Rasheed, Release to Economics, Poorva Magazines 2003)

Law of Supply

This legislation establishes the partnership between your price of the item and its supply. According to this law other things being similar, the supply of commodity rises with a rise in its price and decreases with a fall in price. It shows the connection between price and offer is positive and immediate. This law explains or says that, when the price of product began to increases, the manufacturer who producing particular product will urge to produce more and therefore to provide more materials and when price began to fall he will cut his resource from the suppliers.

Some assumptions of rules of resource

No change in the price tag on factors of production

No change in the price of related goods.

No change in the goals of the company.

Producers do not expect any change in the price of commodity in forseeable future.

No change in the point out of technology.

No change in the amount of producers.

No change in federal policies like taxes.

Price

Supply curve

Supply

The above diagram implies that how the way to obtain goods differing on the price of the commodity. Source curve moving upward from right to left.

Above we clearly described about how precisely the demand and offer influencing on its variation of price.

Now let's make an experiment about how the marketplace of computers impacting on on its price and demand. Or why price of pcs are low even though there exists popular for the personal computers. (Janeen R. Adil, Resource and Demand, Capstone Press, 2006. )

Factors impacting price and volume demanded for computers.

Taste and desire of Consumers

There are a few tastes and preference for consumers in their products or commodities. When the merchandise can meet up with the choice of the consumers they'll opt for that particular product and will started out to demand more that product. Also whenever a product does not fulfill the taste of the consumers, the merchandise will be flop and consumers wouldn't normally opt for the product. So the satisfaction of consumer inclination is most important thing for just about any product. So each company should have to make proper market evaluation about the taste and desire of consumers before a product is going to launch.

In case of computers

Consumers have high flavor and desire on computers. They preferring more attributes on computers more recently. These are more preferred about style, color, weight, performance etc. now a great deal of computers are available with all feature and attributes. Every brand can meet the style of consumers. Hence it's very clear that consumer style and desire have critical role in demand for a item.

Taste of consumer

D2

D1

Demand

The above graph implies that the demand curve has shifted from D1 to D2. This is the there is a positive move or right change in the computer sales.

Price of complimentary products

Any product that comes along with the primary product is known as complementary product. There is a direct connection between main product and its own complementary product. Which means when there is a hike in cost of the complimentary product; the price of main product also will increase. In addition, it affects change popular in an inverse relation.

In the truth of computer

Computers approaching with a great deal accessories in the market. So when there's a reduction in the price of accessories, the price tag on computer will fall and hence the demand for the pcs will be saturated in the marketplace.

While we analyzing about today's computer market, the price tag on its accessories such as hard disk drive, processor, RAM, monitor etc. are lessening year by season. So it is assisting to fall in the price tag on computers, and upsurge in the demand of pcs.

Price of complimentary product

Demand

The above graph demonstrates there's a shift popular to the right.

Computers contain lots of complimentary products. Among the key complimentary products of computer is micro processor chip. Intel is one of the very most famous micro processor chip producers. The following stand shows the change in cost of Intel processors on the market.

Price

Computer

Processor

From the above graph, we can recognize that the prices of processor are going down. Due to the price tag on processors is going down, the price of pcs is also heading down.

Factors impacting price and offer for personal computers

Technology

Way to obtain product is greatly affected by Scientific changes occurring around. Technology is an ever changing factor. When there is a improvement in technology, the new machines would be accessible and the cost of development will be reduced. So providers getting an opportunity to source and produce more at same cost and it'll lead to hike of earnings of the business.

In the situation of computers

Today technology has upgraded a lot. As consequence of technological improvement, the way to obtain computer systems has increased. In creation of computers technical advancement is effected a lot. Now a day higher performance computer systems can be produced with low cost. The power intake of modern personal computers tend to be because of new technology created in neuro-scientific computer manufacturing. We all know that invention of microchips has taken a tremendous change in how big is computers. Atom processor chip is another example for reducing the cost of processors and therefore computers. Technology of LCD system caused to increment of laptop computers.

So technological growth will reduce the price and price of pcs and there will have more demand in computer market

Technology

S1 S2 supply

The above graph show that the increase in supply of the computer. This is the supply curve shifted to right (QS1 to QS2) which really is a positive shift. That people can also see the price it could or might not be change. Despite the fact that the quantity offered increase allots.

Cost of Factors of Creation

Factors of creation include land, labor, capital and organizer. Inside the supply of product factors of creation also have essential role. When there's a fall in the price of factors of production that will lead to upsurge in the way to obtain commodities.

In the situation of computer

In initial stage it was very expensive to produce a computer. But today the expense of factors of creation such as labor, capital has reduced a whole lot. Today computer systems can be produced with low priced. So the way to obtain companies in computer field has dramatically increased and company can produce the computer systems more and more with same cost. So, 'factors of production' and offer has an optimistic impact.

Factors of production

S1 S2 supply

In above diagram, the supply curve shows a good shift to the right. This is the curve shifted from S1 to S2. So there's a high upsurge in the quantity supply of computer.

Competitors

Competitors are the suppliers who producing the same category of product. The amount of producer or competition is another factor that impacts the way to obtain a item. When, there is more number of sellers in the market, there will have significantly more supply of the particular product on the market. Thus there must be high competition among sellers. Here the providers try to make advantages of competition arising on the market.

In the case of computer

We know that we now have lots of manufacturers in computer market like Sony, HP, Toshiba, Dell, Apple, Acer, Lenovo, etc. Thus there is high competition are present on the market. For contending and sustaining in the market they want to take up new strategies. Taking price innovator ship by low priced is the existing tendency in computer market. In addition they ensure their product availability in the market by supplying increasingly more computer in the market.

Competition

S! S2 Supply

These graph shows a positive shift or right shift from S1 to S2. That's it means the increase in the amount of supply of computer.

Equilibrium point

Equilibrium point is a point there is no profit no loss. Quite simply equilibrium point is the idea by which resource and demand for a product becomes equal. It could happen when the price tag on the commodity extends to in a particular value. Thus the purchase price where the source and demand of any commodity is equal is recognized as equilibrium price. In a nutshell, we can say that in Equilibrium there is absolutely no extra demand and unnecessary supply.

Price

Demand

Equilibrium price

Supply

Equilibrium Quantity

The above graph shows the equilibrium of demand and offer of a product. Here the point shows where the demand line and supply line intersect one another when it extends to on a specific price. Thus at equilibrium price, demand and offer became equal.

In the case of computer addititionally there is have an equilibrium point where source and demand for computer extends to equal. That took place when the price of computer reaches at a particular point, called equilibrium price.

(Franklin M. Fisher, Disequilibrium foundations of equilibrium economics, Cambridge College or university Press, 1989)

Price determinants of computer

We can see how the price of the computer has gone down by analyzing the equilibrium chart using demand and offer.

We already noticed that the demand curve change directly into right. The following graph shows the demand curve equilibrium;

Price Price

Equilibrium price

Equilibrium Demand

From the above graph, we can see that the demand shifts right and the purchase price goes up. But this is not true as the demand aspect factor is not the sole factor that can determine the purchase price.

From the supply area, we can pull the graph as

Price

S1

P1 S2

P2 Price

Equilibrium Supply

The above mentioned graph demonstrates the price of computer goes down when the resource rises as the supply shifts to the right (S1 to S2). This demonstrates the price of the computers has gone down only once the source changes which is not highly relevant to what we need.

Here we may take both demand and offer. It shows from the above examination that the computer price is mainly afflicted by the resource than the demand factors. The various factors of supply (technology, volume of manufacturers, factors of production) makes the source curve switch at a high rate to the right. The factors of demand ( consumers Choice, Price of complementary product) makes the demand curve shifts to the right but at a very small rate as it doesn't have just as much impact as the source curve has.

It is clear that, with the result of demand and supply of the personal computers the price tag on computers has gone down. It implies that both resource and demand curve shifted directly into right. That is a positive move in both demand and offer curve. Thus we've proved that the price tag on the computer goes down with the upsurge in demand and supply.

Conclusion

Regulations of demand and offer describes that the way the demand and offer of a item affected with various factors. Aside from demand there are many factors to be considered to look for the price of any commodity

In the truth of pcs in modern market the prices are low even though there is high demand. It is so because, alternatively than price of the commodity there are other factors to be considered to look for the demand. Apart from the demand the resource need to be thought to determine the price of a product. So in a nutshell, in case there is computers to determine the price we must take both demand and supply in to account. We can note that the price tag on computer has gone down when demand and offer increased.

Reference

Pro John Samuel, Micro and Macro Economics, New legend Publication, 2000

Pro Abdul Rasheed, Launch to Economics, Poorva Magazines 2003.

Janeen R. Adil, Source and Demand, Capstone Press, 2006.

Franklin M. Fisher, Disequilibrium foundations of equilibrium economics, Cambridge University Press, 1989

www. investopedia. com

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