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3. Although the technology for smartphones has improved greatly, and the components for producing a smartphone...

3. Although the technology for smartphones has improved greatly, and the components for producing a smartphone are less expensive than they were at the debut of the iPhone, the price of a new iPhone is more than double the cost of an original iPhone. How would an economist explain this increase in price?

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Answer #1

The price of a product is determined by the demand and supply of thr product. If the supply is less and demand is more, the manufacturers will obviously tend to price the product high owing to it's intense demand.

On the other hand if the demand is less and supply is Kore then the price will also be reduced in order to increase sales.

In the case of an i-phone, it has created brand for itself in the market and in order to maintain the market share and sustain the competition, Apple maintains the price of a new iPhone high than that of the original iPhone. An economist can view this as a marketing and business tactics.

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