Products, Services, and Prices � PAGE \* MERGEFORMAT �1�
Running head: PRODUCTS, SERVICES, AND PRICES IN THE FREE MARKET
Products, Services, and Prices in the Free Market Economy
University of Phoenix
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Products, Services, and Prices in the Free Market Economy
A free market economy is a market "where buyers and sellers can make the deals they wish to make without any interference, except by the forces of demand and supply" (BusinessDictionary.com, 2009). This free market economy allows us to make decisions regarding economic activities and transactions without government intervention by allowing businesses to provide products or services at a cost that would benefit them financially. Apple must decide whether to increase or decrease the price of the iPhone in order to increase revenue.
The average price of one iPhone is $299 dollars. What determines price increases or decreases for this product? To determine whether Apple should raise or lower the price based on the elasticity of demand because price changes could affect consumer demand or the elasticity of supply.
The illustration that accompanied Marshall's origi...
Perfectly inelastic demand
Perfectly elastic demandIf the manufacturers or resource suppliers' price changes, it could affect the price of the iPhone which both the Price Elasticity of Demand to make pricing decisions and Income Elasticity of Demand to predict demand should be considered.
Problem Statement
Apple has to make a decision related to increasing or decreasing the price of the iPhone that it sells. It will use price and income elasticity of demand to determine whether to increase or decrease the price.
The Apple iPhone was unveiled on July 29th, 2007 to an outbreak of anticipation of people who was eager to use them. Due to the high expectation 6 million iPhones were sold at an astonishing time of one year form the time of its released date. The third generation iPhone was released on...