Estimating Demand Mobile Applications

Question: Discuss about the Estimating Demand for Mobile Applications. Answer: Introduction The most primary concept of economics as well as the backbone of the market economy is termed as supply and demand. Demand refers to the total amount of a product as well as service that is desired by the purchasers. The quantity demanded is the total amount of a commodity that individuals are willing to purchase at a certain cost. The relationship between quantity demanded as well as price is referred to as demand relationship. On the other hand, supply symbolizes how much the market can provide. The amount of a certain commodity that the producers are willing to supply at a convinced price is referred to as supply. Supply relationship refers to the connection between price as well as the amount of good or service that is supplied to the market. The correlation between demand and supply underlie the forces behind the allocation of resources. The correlation between demand and supply motivate the forces behind the allotment of resources (Bowen Sosa, 2014). Discussion The market for mobile phones is a good example to describe the basic concept of demand and supply. With the improvement in technology, the supply for mobile phones increases. This in turn reduces price and leads to increase in demand. The graph shows that with the fall in price from P1 to P, both the supply and demand for mobile phones rises. The supply increases from S1 to S by shifting towards the right and similarly, demand rises from D1 to D (Ross, 2016). Figure: Demand and Supply for Mobile Phones (Source: Created by Author) As per the reports, in the near future the demand for mobile phones is going to increase rapidly due to huge fall in their price. The major factors that will lead to the reduction in the price of mobile phones are the growth of markets in the developing countries such as China. Combined with greater competition as well as improvement in the technology, the prices of mobile phones are likely to fall up to 75 percent. With the high level of inventories, the supply for mobile phones continues to rise. The telecommunication companies also helped to reduce the price for mobile phone as they subsidized handsets of mobile phones to lock customers into gainful contracts (Ghose Han, 2014). The major reason that helped to increase the demand is the ability to make the use of text messaging that previously did not exist in the traditional phones. As a result, the sale of mobile phones increased as the individuals gave up the use of landlines due to the added advantages. The value to the individuals is influenced by both the demand as well as supply of mobile phones as well as the network services that operate the mobiles. Due to the willingness to supply, the operators have provided low costs for customers and as a result, the demand has increased dramatically. There is always a high profit margin for mobile phones as the cost of the parts to manufacture the mobile phones are too low (Tao et al., 2016). There are various factors that affect the demand for mobile phones. The major factors include income, quality, advertising, complements, substitutes as well as expectation of the future prices. An increase in the income of the customers will lead to increase of the demand of the mobile phones. In other words, the individuals will find it more affordable with the increase in income. The improvement in quality will also lead to the increase in demand for mobile phones. In other words, the demand for the mobile phones with advanced digital camera will be more. Advertisement will also lead to increase in the demand for mobile phones, as the individuals will prefer those mobiles that have a brand image. On the other hand, if the individuals expect the price to increase in the future, they are likely to purchase mobile phones at present. An increase in the price of substitutes also affects demand. Example, if the price of Apple increases, the demand for Samsung will increase. On the other hand, a fall in the price of complements will lead to increase in demand (Jindal, 2016). The factors that affect the supply of mobile phones in the market include price, technology, and cost of production and government policies. There is a direct relationship between price and supply of a commodity. Alter in supply with respect to alter in price is termed as the difference in supply of a product. As a result, the decrease in price of mobile phones will lead to increase in the supply. On the other hand, the supply for mobile phones will decrease with the increase in the cost of production. The advancement of technology also leads to increase in the supply of mobile phones. Industrial and fiscal policy has a larger impact on the supply of mobile phones. In other words, the imposition of tax by the government will lead to decrease of the supply of mobile phones (Ehrenberg Smith, 2016). Conclusion It can be concluded that there is always a high profit margin for mobile phones as the cost of the parts to manufacture the mobile phones are too low. Advertisement leads to increase in the demand for mobile phones, as the individuals will prefer those mobiles that have a brand image. On the other hand, the advancement of technology also leads to increase in the supply of mobile phones. It can also be concluded that if the rate of tax imposed by the government is low, the supply will increase. References Bowen, W. G., Sosa, J. A. (2014). Prospects for faculty in the arts and sciences: A study of factors affecting demand and supply, 1987 to 2012. Princeton University Press. Ehrenberg, R. G., Smith, R. S. (2016). Modern labor economics: Theory and public policy. Routledge. Ghose, A., Han, S. P. (2014). 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