The Economic Environment and Anatomy of Business
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October 25, 2022The Economic Environment and Anatomy of Business
The Economic Environment and Anatomy of Business
Law of Supply and Demand
Headline: Nexus 6 sold out: Google Play Store will have more in stock every Wednesday
The first economic phenomenon that we are going to look at is the law of supply and demand. In its raw form it states that if the demand for certain product is higher than its availability (supply) then the price for that product goes up and if the vice versa is present then it decreases (Baye, 2010).
A current example of this is the lightning fast selling of Google’s latest flagship smartphone – Nexus 6. Upon its release in the Google Play Online store, the first shipment was sold out within minutes. After that, when the second shipment arrived, the same situation repeated. This is a clear indicator that the demand of Nexus 6 was way higher than the actual supply.
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The reasons for such a high demand can be attributed to several factors. Firstly, Google’s Nexus 6 came with the new Android operating system version 5.0 (Code name Lollipop), being the only phone on the market that supports it. Secondly, the price of Nexus 6 was (and currently is) relatively lower than its competitor‘s – it is cheaper than Apple’s IPhone 6, 6Plus and Sony’s Xperia Z3 (Luke Johnson, 7 November, 2014), and approximately same priced as Samsung’s Galaxy S5. This gives an extra layer of appeal to buyers and combined with its high quality, the reason behind the extremely high demand of the Google’s smart phone is justified.
