Mobile Phone And Wireless Data Service

1329 Words Jan 19th, 2016 6 Pages
Cell phone and wireless data service are the leading complements for smartphones like the Galaxy S. Leading network providers in the U.S. are AT&T, Verizon, Sprint and T-Mobile. These service providers give consumers access to their networks (equipment and services) that allow smartphone devices to make and receive phone calls and access the Internet; sell and lease devices; and provide technical support to help consumers use and troubleshoot their devices.
In addition to wireless services, smartphones have been the catalyst for two new industries: accessories and apps. Wired and wireless headphones, cases, screen protectors, mounts and stands and chargers are some of the most popular accessories that allow users to make the most of
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To determine the Price Elasticity of Demand (PEoD), we first calculate the percentage change in quantity demanded : [QD2 – QD1]/QD1 = [11 million – 10 million]/10 million = .1 or 10%. Next, we determine the percentage change in price: [P2 – P1]/P1 = [650-630]/630 = 0.0317 or 3%. Finally, we calculate the Price Elasticity of Demand (PEoD): (% Change in Quantity Demanded)/(% Change in Price) = (.1 )/(0.0317) = 3.1545. Since the PEoD for the Galaxy S is greater than 1, demand is Price Elastic or very sensitive to price changes.
We expect to see demand decrease with an increase in price, but there was a significant increase in demand for the S5 despite a 3% price increase. This only applies in the short run. While a small increase in price has little effect on demand in the short run, fewer consumers would opt to purchase or upgrade to a high-end smartphone like the Galaxy S if the price of the device remained high over the long run. As the market gears up for the release of the next model, the price of the current model drops and demand increases.
The difference in the short run and long run of demand for the Galaxy S boils down to disposable income: Among those who deem a mobile phone a necessity, a smartphone is not a necessity. Additionally, there are a number of substitutes available at lower price points so that consumers who “need” a mobile phone or a smartphone can purchase one without having to
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