Concepts of Supply and Demand Analysis Concepts
Good and its Characteristics
Smartphones, with their sleek designs and many useful features, are a revolutionary combination of modern technology and communication. Powerful processors and high-resolution touchscreens make them a flexible base for various uses, making them an essential part of contemporary life (Telecomdrive Bureau, 2023). Smartphones are more than just messengers; they are also mobile assistants that perform functions like connecting to the internet and taking pictures. A competitive market encourages this constant change, leading to devices that meet and exceed user standards. These ongoing improvements include faster working speeds and more storage space. In response to the world’s never-ending need for connectivity and convenience, smartphones have spread quickly, solidifying their place as an essential part of modern life.
Substitutes
Smartphones compete with personal computers and tablets, but smartwatches and wireless headphones create a complex ecology where portability, computational power, and connectivity combine. One distinguishing alternative is the conventional desktop computer or laptop, which has a bigger screen size and relatively strong computing power despite not having the portability associated with smartphones. Some people may use a computer for tasks requiring intensive work or content creation instead of smartphones. In addition, tablets are another alternative, an in-between solution with screen sizes larger than smartphones but more mobile than laptops. Conversely, smartphones have abundant complementary goods like wireless headphones, smartwatches, and fitness trackers that improve the user experience. These devices integrate seamlessly with smartphones, enhancing their capabilities and completing the integrated ecosystem. For instance, a smartwatch can augment a smartphone by sending the user immediate updates and health monitoring capabilities. Therefore, the interplay between smartphones and their replacements or supplements shows a dynamic following in the constantly changing consumer electronics environment.
Whether the Good is a Normal Good or Inferior
Smartphones are undeniably regarded as normal goods, and this classification can be justified by the fact that customers’ demand for smartphones also increases with an increase in their income levels. With the rise in individual financial stability, smartphone demand also has a corresponding increase (Rakib, Pramanik, Amran, Islam, & Sarker, 2022). The dynamic relationship between income and demand complies with typical characteristics of goods. The availability and affordability of smartphones also make them so, thus allowing a broader segment of the population to include such devices in their daily routines as they continue to earn more. Unlike inferior goods, where demand may escalate during economic downturns, smartphones remain attractive and desired as incomes rise, making them a standard product in the consumer electronics market amongst all income groups. Thus, the growing tendency to buy smartphones with an ever-increasing income implies their status as everyday goods in this changing world of consumers’ tastes.
Main Non-Price Factors that Could Cause an Increase or Decrease in the Demand
The complex interaction of technology progress, lifestyle trends, marketing techniques, demographic choices, and economic situations shapes smartphone demand. Improvements in technology, like better cameras and faster computers, are significant factors that attract customers with their cutting-edge features (Petrescu-Mag, Petrescu, & Azadi, 2022). While this happens, changes in living trends, like more people working from home, drive demand for smartphones with the best connectivity and productivity features. Also, It is impossible to overstate how vital marketing efforts are because they change how people think and what they want, changing the demand landscape. Furthermore, there are significant demographic factors, especially for younger people, who are more likely to prefer digital contact. However, economic downturns may work against smartphone sales by making people put off or rethink buying them because they need to know how much money they will have (Kamal Basha, Aw, & Chuah, 2022). As a result, the complex path of smartphone demand is set by how new technologies, changing consumer tastes, marketing tactics, population trends, and the economy all affect each other.
Main Non-Price Factors that Could Cause an Increase or Decrease in the Supply
Technological advances, raw material availability, regulatory frameworks, market competitiveness, and geopolitical factors shape the smartphone supply chain. First, improvements in manufacturing technology and methods can make things more efficient, making more smartphones available by lowering their cost (Althaf & Babbitt, 2021). Alterations in the cost and availability of raw materials like rare earth metals and semiconductors can also affect supply patterns. The production and spread of smartphones may also be affected by government rules and trade policies. Competitive markets and new companies can lead to new ideas and higher production levels, changing the total supply. Additionally, global factors like trade disputes or problems in the supply chain can cause uncertainty that impacts the availability of smartphones (Althaf & Babbitt, 2021). Thus, the supply of smartphones is closely connected to changes in technology, the abundance of raw materials, government rules, market competition, and political issues affecting the overall dynamics of the consumer electronics industry.
Change in Demand Affects the Equilibrium Price
In the constantly changing field of smartphones, any change in demand can significantly impact equilibrium price and quantity dynamics. For example, envision a scenario where demand spikes due to the launch of an advanced smartphone model that everyone is waiting for. As a result, the equilibrium price is positioned to rise because of insatiable desires by consumers to enjoy innovations in technology coupled with their willingness to pay more (Deng et al., 2021). This rise in demand drives suppliers to realign prices, initiating a noticeable shift along the supply curve. In line with this, the equilibrium quantity grows, demonstrating increased sales and more robust transaction volumes in the market. In contrast, in periods of reduced demand, possibly during economic depressions, the equilibrium price may decrease (Woodford, 2022). More aware of the more price-sensitive consumer base, suppliers adjust their pricing strategies this is a fundamental shift downwards along the supply curve. Similarly, the equilibrium volume shrinks, indicating a decrease in smartphone demand. According to this dynamic viewpoint, changes in demand dictate the exact adjustments made to quantity and pricing to balance the constantly shifting whims of customer desires.
Change in Supply Affects the Equilibrium Price
Specifically, a shift in the supply of smartphones can significantly affect equilibrium price and number dynamics. For instance, the supply of smartphones goes up because manufacturing processes have been simplified or production has become more efficient. The upward pressure on the equilibrium price would be reduced by the increase in supply, forcing manufacturers to change costs to make it easier to sell the extra smartphones (Luther, 2022). At the same time, the equilibrium amount would go up, representing more smartphones on the market. If the supply of smartphones goes down, possibly because of problems in the supply chain, the average price could go up. In response to the limited number of smartphones on the market, manufacturers raise prices, causing a shift along the demand curve. At the same time, the equilibrium amount would go down, which shows that fewer general market transactions are happening. Therefore, in the ever-changing smartphone market, changes in supply are a crucial part of reshaping the balance between price and number (Luther, 2022). These changes are caused by things like how efficiently production is done, problems in the supply chain, and general market conditions.
Demand for Goods or Services over the Next Five Years
Within the next five years, there will likely be a strong demand for smartphones because of expected improvements in wireless technologies, especially the general use of 5G. With environmental worries leading to possible breakthroughs in batteries and power management, smartphones will likely keep changing to meet customers’ changing needs (Bunton, 2021). Continuous study into batteries could solve a common user problem by making smartphone batteries last longer. Additionally, the trend in the industry to get rid of physical charging ports in favor of wireless charging shows a desire for thinner and more durable gadget designs. Smartphones will likely be used more as personal messengers than computers, which fits perfectly with the growing reliance on cloud computing. This means that smartphones will continue to be useful as essential communication. Security and dependability improvements that are expected, like two-factor login, may make smartphones even more critical in people’s daily lives (Goraai, 2023). Furthermore, the expected improvements in smartphone technology and ways of using them will likely keep or boost the demand for these gadgets over the next five years.
Supply of Goods or Services over the Next Five Years
The range of smartphones is expected to keep changing over the next five years, increasing supply. Significant progress is expected in areas like power and batteries, and ongoing study is likely to lead to better ways to store energy. Smartphones will likely no longer have physical ports because of many wireless charging and data-sharing options (Abdullah, 2023). There will likely be a significant change in how people use smartphones, with more emphasis on them as personal communicators than as computers, with most of the work and data stored in the cloud. The environment will change even more as security measures are improved and wireless tokens are used for authentication. Enterprise Mobility Management (EMM) needs may also be made more accessible if private data storage is used less. Though virtual reality (VR) and direct brain connections are possible future technologies, they are not expected to significantly affect the primary smartphone market in the next five years (Bunton, 2021). The supply of smartphones is about to change significantly due to technological improvements and user experience.
References
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Woodford, M. (2022). Effective Demand Failures and the Limits of Monetary Stabilization Policy. American Economic Review, 112(5), 1475–1481. https://doi.org/10.1257/aer.20201529