Economics Analysis of Iphone

Topics: Economics, IPhone, Macroeconomics Pages: 1 (351 words) Published: October 28, 2012
In the USA today article published on September 25, 2012, the effect of the iPhone 5 on the economy is discussed. As everyone already knows, we are still in a great economic recession. It is estimated, however, that the selling of the iPhone to consumers will add approximately 3 billion dollars to the US economy by the end of this year. Within this article, the concept of economic growth is prevalent. With the expected 3 billion dollars expected to be added to the US economy, this would add approximately 1/3 of a percentage point to our economy’s economic growth rate by the end of this year. Compared to the iPhone sales last year for the iPhone 4s, they added approximately .1-.2 of a percentage point to the country’s economic growth, which is less than the expected earnings of the iphone 5. The US economic growth rate for this year with the aid of the iPhone 5 is predicted to be somewhere between 2 to 2.5 percent. This is pretty weak, but factors such as the quality of the product, the quantity supplied, the quantity demanded, and popularity of the good nonetheless is contributing to the country’s overall economic growth. Going back to the statement of this percentage growth is still pretty week, this is explained when Zandi explains that increased spending on iPhones would mean decreased spending on other things. This can be related to the concept of opportunity cost. For example, if Mary were to spend money on a $200 16GB iPhone 5, then she would have to give up buying those 2 pairs of shoes that she’s been eyeing down at the mall. Another economic concept demonstrated is the effect of quantity demanded of a good on one of its goods complements. With the sales of iPhones going up, then there would be an increased demand for iPhone cases, chargers, earphones, etc because they are complements to the iPhone itself. It is clear that the iPhone 5 is an incredibly popular product already and this article explains the effect of it on the economy today.
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