Factors That Determine The Demand And Supply Economics Essay

1507 words (6 pages) essay in Economics

5/12/16 Economics Reference this

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Nowadays, mobile phone having a plenty of innovative functions and applications that will bring out a lot of convenience to human being compare to the past. In this assessment we will more emphasize into the development of Samsung mobile phone from early of the year until today’s. Basically, the company was been found by Lee Byung Chul which is from South Korea at 1983. Samsung electronics had launched their first mobile phone in 1988 at South Korea market. However, during that time the demand for this market was very poor and unstable. In 2007, Samsung electronics become second largest mobile phone maker in the world and they had successfully overtaking Motorola for the very first time. Samsung was the world’s largest manufacturer of OLEDs. Due to the advanced and innovative digital world, Samsung had produce the first smart phone which is known as Samsung Galaxy S and its launch in the March 2010 and become the top selling smart phone in India market. This smart phone has build with the OLEDs screen and have android software which significantly compete against another well-known smart phone which is call Iphone by Apple.

After the few years, Samsung had come out new model which named as Galaxy S2 and this model get best android device at the year of 2011. On the other hand, Samsung had launched another latest model which is Galaxy 3 in 2012 due to the innovative and advance technology they have. Samsung had received over 9 million preorders for this model in between two weeks after the unveiling and it sold over 10 million devices in less than 3 month. Based on the above sales figure, this prove that the demand and supply for this model is much more above than others model.

Factors that Determine the Demand and Supply

There are some factors that can influence the demand and supply of Samsung mobile phone. The first one to influence the demand of the mobile phone is the price. For different person they have different view of the price. For most of people, mobile phone is just a thing can contact with others, so that they don’t need new updated mobile phone. At this point, the decrease of the price will cause an increase of quantity demand, the demand is elastic. The second factor is the income of buyers themselves, is either their salaries can be afford to the mobile phone. For example, the price of Samsung Note 2 is RM2200, but the average income of those buyers is only RM3000 per month, so that they won’t give 73% of their salary to buy this phone. Another reason of the shift in demand is the number of the buyers is there many people interested with the model. Samsung mobile has a big competitor which is Iphone, it’s like the first time Samsung S3 come out people may be interested with this model, but after Apple Iphone 5 launched, they find themselves are more interested with the new Iphone 5, so that the demand of Samsung S3 will decrease. This may also compete with own brand mobile phone, like S3 compete with Note 2.

The factors that can determine the supply of Samsung mobile phone also have some points. For the view of sellers the input price is a factor determines the supply, the price when the price is higher, they can earn more. As we know, when a new model of mobile phone first comes out, the price will be the highest period, at that time Samsung Company can get more benefits. By the decrease of the price, the benefits will become less and less, so that the supply will also going down. The supply also can be influenced by the new model of Samsung mobile phone or the term of the model itself. Like Samsung Splus, after a long term selling this model, the company itself will reduce the supply of this model. By the decrease of the price, company won’t get profit of this model, so that they will stop producing this model after a model come out. Now Samsung mobile have S3 and Note 1/2, it’s hard to find Splus in the market.

Figure 1. Changes in trend of price of the mobile phone

The change in trend of price of mobile phone is always being decreased by the pass of time. As we can see from Figure 1, here are two changes in trend of price of Samsung mobile phone, one is S3 and the other one is Samsung Note2. These two models of mobile phone are the most popular models of Samsung. We can find the time when the mobile phone first came out, the price was at the highest point. Samsung S3, when the time it launched, the original price is RM2199. The price will stay for one to two months, and then it will decrease, and till March 2013, people can get this phone as low as RM1659. Same as Samsung Note2, but the different is, during February 2013, this model is out of stock, the demand is higher than the supply, so that the price has been increased.

The demand of the mobile phone will influence the price and quantity. When there have more buyers, the price might not decrease as fast as it will be, but might also increase a bit, the quantity supply will also be increased. It’s like the price increase of Note2, the demand increase, so that the quantity supply increase, and after that period the price come back to the normal trend.

How the determinants of supply affect the price and quantity, when the supply increases, the quantity supply also increase, so that the price will become lower. When the price is getting lower, people will be more willing to buy it, so that the quantity demand will increase.

Government Intervenes

In these days, government of Malaysia also had intervenes into mobile phone market. First of all, in Malaysia, the economy system is a mixed economic system. Mixed economy system can be defined as the combination of the benefit of the free enterprise and central command system. In Malaysia, some company is controlled by the government however some are private. Furthermore, Malaysia governments are helping those business people according to the legist ration and regulation, and they are not just about seller, they also included buyer and also the consumer as well. For instance, the government will assure the consumer are satisfied or agree the prices of goods and services provided by the seller.

There are a lots of economy issues that need to be solve by government , shortage and the surplus are one of the most common issues that occurs in Malaysia. But In mobile phone industry surplus issue seem to be the most popular issues in Malaysia. Surplus is meaning the supply of the goods and services are more than the demand of the consumer. Therefore, when they are surplus, the supplier will try to reduce the price in order to create higher demand of the consumer. In others words, surplus is mean that when the supply of goods and services is higher, consequently its makes the consumer not willing to spend so much money to get the goods or services.

In this current year , the Samsung company was launch a different kind of brand new smart phone and these brand new smart phone was been mass production by the company therefore the price of the phones will be more expensive than normal phone . After the Samsung company had launched the smart phones in the period of time, the supply are not met the demand of the consumer because of the higher price and consumer unwilling to spend that much of money to purchase a mobile phone.

Thus based on the situation above, Malaysia government has the responsibility to help the supplier to meet the demand of the consumer. In order to overcome this surplus problem, Malaysia governments have to use different ways to defeat this problem. For instance , Government has recently helping those students and working adult that have salary below RM2000 by subsidiary RM200 rebate for those who purchase the smart phone .

Besides that, changes to taxation are also one of the good ways for government to defeat the surplus issues. For example, the government will conduct a research to check on the tax payment that is paid by the supplier so that the government can make an adjustment to the taxation for suppliers in the certain period of time. With this change of taxation, the suppliers are able to reduce the price and meet the demand of the consumer.

In conclusion, Malaysia government should intervene the economy and using the suitable solution to defeat the economy issues by managing financial well and rational. Government also need to have a rational and clear before they make decision making on economy , because this will eventually impact the to the public.

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