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Business Economics - Essay Example

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Most of the population is moving towards the use of tablets. This in turn has led to the decline in the demand for netbook computers, laptops and desktops in Western Europe. As a matter of fact the demand of these three…
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Download file to see previous pages The manufacturers also are faced with a situation where they have to lower the supply of laptops and instead focus on the production of tablet computers. An example of tablet computers is the iPad. In the last one year, netbooks and laptops have been hit the hardest by the new consumer appetite. Due to this; netbook shipments declined by 53%, while desktop PC’s demand fell by 15.4%, over the same period. (Halliday, 2011)
The process above can be explained economically using the demand and supply theory. Demand is simply the purchaser’s desire and ability to pay for a price of a given commodity. Supply and demand meet due to one thing- Supply. Thus, where a seller is offering to dispose a commodity at the level of price that a purchaser is ready to pay; then, the purchaser and the seller are at an agreement point known as market equilibrium. (Ball and Seidman, 2011 pp9, 10)
Demand and supply concepts are basically the most primary concepts of the field of economics. It forms the core of a market economy like that of the U.K. Price serves as a reflection of the effects of demand and supply on the market. This relationship that exists between supply and demand is the one that drives resource allocation.
To understand this concept further, and to be able to understand it in the context of laptops, the laws of demand as well as supply are going to be looked at. The demand law, simply states that, ceteris paribus, the higher a commodity’s price is, the less will the demand be for that commodity. That of supply states that, the higher the price of a commodity, the higher the supply of the same commodity will be. Therefore, the higher the levels of prices, the lesser the demanded quantity of a commodity.
In the scenario of the study, it is the demand of laptops that declines due to an introduction of a new substitute product in the market. Due to this, the demand curve would shift leftwards to reflect a decline in laptop’s demand.
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