The Effect Of Demand On Nokia And Samsung

842 word (3 pages) essay in Economics

5/12/16 Economics Reference this

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Nokia N86 and Samsung Innov8 demanded will be affected due to the change in quantity demand and change in demand. The quantity demanded is also affected by the non-price determinant, namely, income, price of related goods, taste and preference, future expectation of price and number of consumers. These factors will cause the demand curve shift right or left; however, the changes in price factor will cause the demand curve move upward or downward. So, when there is a change in the price of the goods causes a movement along the demand curve.

According to the law of demand, there is an inversely proportional between price and the quantity demanded. Besides that, Nokia N86 and Samsung Innov8 are the substitution products. When the price of N86 increase, the quantity demanded for Samsung Innov8 will increase and vice versa.

Price of N86

Quantity of N86

If the price of N86 increases, the quantity demanded will decrease and vice versa.

graph1.jpg

Therefore, when the price of N86 increase, the quantity demand of Innov8 will increase and the graph shift rightward because Nokia N86 and Samsung Innov8 are the substitution product.

Change in demand curve – non- price determinant with ceteris paribus

There are a number of instances which may positively or adversely affect the demand of a particular product. For instance Moreover the increase or decrease of prices in related goods will also affect the demand of a product. If a related goods’ price decreases, then there is an expected demanded for the reduced-price product and a lower demand for the marketed product.

Income

An increase in the income of the targeted customers will increase the demand of the marketed product. This is because the customers are given an increased buying capacity. Therefore, the demand curves shift rightward.

graph1.jpg

Number of consumers

Decrease demand curve for N86

Increase demand curve for N86

graph1.jpggraph3.jpg

When there are many people buy hand phone, the quantity demand of hand phone increase. The left graph shows that, when number of buyers increase, the quantity demand for N86 increase as well. Therefore, the demand curve for N86 shifts rightward. Population growth is the main factor that causes increasing in consumers.

On the other hand, when there is low population growth or high death rate, it causes the quantity demanded decrease. Therefore, the demand curve shifts leftward.

Taste and preferences of consumer

graph1.jpggraph3.jpg

Taste and preferences of consumer is determined by the layout, fad design and display of the hand phone. If the hand phone design is popular, the demand will be higher. In order to promote their product, the company advertises and designs their hand phone according the fashion trend.

The left graph shows that, when the preferences of consumers increase which due to N86 layout and design are in the trend of fashion. Therefore, there will be increase in demand of the N86, the demand curve shift rightward.

However, the right graph show that, if the consumers feel bored on the N86, and choose Innov8, the demand for N86 will decrease and the curve shift left.

Expectation of future prices

graph1.jpggraph3.jpg

The left graph shows that, when consumers know there will be increase price in future for N86, the consumers will buy the hand phone now. Therefore, the current quantity demand increases and the demand curves shift rightward.

The right graph shows that, when consumers know there will be decrease price in future for N86, the consumers will not buy the hand phone now. Therefore, it causes the current quantity demanded decreases and the demand curves shift leftward.

Price of related goods

graph1.jpggraph3.jpg

In this case, changes in the price of related goods will affect the demand of the goods which is the substitute of the N86. When there is change in price of Nokia N86, consumers will buy the other related goods which is Samsung Innov8 because Samsung Innov8 is the substitute of Nokia N86.Therefore, it will cause shift in demand curve.

The left graph shows that the demand curve will shift to the right, if the price of the related goods increase. Samsung Innov8 is the substitute of Nokia N86. Therefore, when the price of Innov8 increase, the demand for N86 increases as well and the demand curves for N86 shift rightward because when the price goes up, people choose others goods that being equals.

However, when the price of Samsung Innov8 decreases, there will be less people buy Nokia N86 because Samsung Innov8 is cheaper now and as they are substitute with each other. Therefore, there will be less demand for Nokia N86 and the demand curve shift leftward.

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