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The Apple iPhone 7 is an economic good - Leaving Cert Economics - Question 2 - 2017
Question 2
The Apple iPhone 7 is an economic good. Economic goods have the following characteristics: they are scarce, transferable and provide utility for the consumer. (i) E... show full transcript
Worked Solution & Example Answer:The Apple iPhone 7 is an economic good - Leaving Cert Economics - Question 2 - 2017
Step 1
Explain any two of the underlined terms, with reference to the Apple iPhone 7.
Answer
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Scarcity: This refers to the limited availability of the iPhone 7 compared to the demand for it. If there are more consumers wanting to buy the iPhone 7 than there are units available, it reflects its scarcity in the market.
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Transferability: This characteristic indicates that ownership of the iPhone 7 can be transferred from one person to another. When a consumer buys an iPhone 7, the ownership shifts from the seller to the buyer.
Step 2
Explain any two of the following economic terms: Normal good, Substitute good, Complementary good.
Answer
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Normal good: The iPhone 7 is considered a normal good as consumers typically buy more of it as their income rises. With increased disposable income, individuals are likely to purchase the iPhone 7 due to its perceived quality and brand value.
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Substitute good: The iPhone 7 may have substitute goods such as the Samsung Galaxy series. These are products that satisfy similar needs; consumers might opt for a Galaxy phone if they find it more budget-friendly or appealing.
Step 3
Draw and label the market demand curve for the Apple iPhone 7.
Answer
To draw the market demand curve, plot the price on the vertical axis and the quantity demanded on the horizontal axis. Connect the points corresponding to the quantity demanded across different prices to create a downward-sloping demand curve.
Step 4
Draw and label the market supply curve for the iPhone 7.
Answer
To illustrate the market supply curve, use the same graph with price on the vertical axis and quantity supplied on the horizontal axis. Connect the points correlating to the quantity supplied across various prices, resulting in an upward-sloping supply curve.
Step 5
Show on your diagram: The market equilibrium price for the Apple iPhone 7 (use label P₁). The market equilibrium quantity for the Apple iPhone 7 (use label Q₁).
Answer
The market equilibrium price (P₁) is found at the intersection of the demand and supply curves. The corresponding quantity at this intersection provides the market equilibrium quantity (Q₁). Label these on the graph clearly to highlight the equilibrium point.