Consumer Decision Making : Supply And Demand

3065 Words13 Pages
Consumer Decision Making: Supply and Demand

Demand in the wireless industry is determined by the aggregation of individual mobile carriers through the number of wireless subscriptions. Economists all agree that price for a service is an important factor in the decision making for consumers, however it is definitely not the only factor and may not always result in the deciding outcome. Based on pricing, microeconomics can estimate and forecast with plausible accuracy what a consumer may pay for and how much of that service will be purchased.
While we do not have available information regarding the pricing to determine the consumer demand in the wireless communication industry, we can represent the demand curve based on the number of
…show more content…
This may become important to keep in mind when deciding whether to invest in Wind Mobile and its profitability.
A new entrant like Wind Mobile may not be profitable given the data due to the decreasing rate of new subscriber growth i.e. lack of main revenue source via selling handset as well as monthly stream of revenue from services. In order for Wind Mobile to be sustainable in the long run, it needs to make a profit where its price is greater than its average cost (including fixed capital infrastructure as well as user’s variable mobility cost.) The population in Canada provided by Statistics Canada demonstrates a healthy positive linear growth over the period of 2005 and 2012. After doing statistical analysis, I can conclude my finding that as population increase; the demand for wireless subscribers also increases while at a very slow rate. Furthermore, my regression findings can help forecast the demand for wireless subscribers over time based on an estimate of population for a given year.
In order to do so, we must first estimate the population for a given year based on this equation:
Population (in millions) = - 676.5029 + 0.3535 * Year
After, we substitute our estimated population value for a given year into another equation to determine the number of wireless subscribers:
Wireless Subscribers (in millions) = - 131.5938 + 4.6155 * Population (in millions)
The demand curve for Wind Mobile
Get Access