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In the News articles below, it is implied that the large increase in Apple’s revenue and profit in 2017 has been associated with a deliberate price increase. How can you explain this association?
A few weeks ago the editor in chief of a regional newspaper offered you the opportunity to write weekly columns on economic issues for Saturday editions. Since then you have been actively analysing different aspects of the economic impacts of different events using your knowledge in Economics. As a Bachelor of Business degree graduate you are particularly interested in the concept of price elasticity of demand and supply, you also know that the price elasticity is an important element of market structures (i.e. buyers in different markets have different price elasticities of demand). Last Saturday you published a column about power of markets. In your column “Market Structure and the Firm Behaviour” you discussed the differences and similarities between perfect competition and monopoly markets and provided an example for each type of market structures. In your column you also indicated that price elasticity is a way of looking at sensitivity of price related to product demand. A few days after publication of your column you received an email from the secretary of the Economic Society of Australia – QLD branch congratulating you on your last influential article, inviting you to be a keynote speaker in the near future event called Young Economist Speaker, a conference to be held in Brisbane. You are quite excited about this opportunity and accept the invitation. You find out that the Young Economist Speaker series this year focuses on Price Policies for New Products. The conference secretariat informs you that the organisers in particular are interested to focus on the multinational technology company, Apple Inc. as an example of a product-driven company with significant global presence. To make discussions more narrowly focused the conference secretariat sends you a few News articles as background information.
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