Answer to Question #82452 in Macroeconomics for uzair

Question #82452

When the iPhone was launched in the second quarter of 2008, it was priced at $599, and
Apple sold 270,000 units during this quarter. In mid-September of that year, Apple reduced
the price to $434, and sales rose to 1,119,000 during this next quarter. Without even doing
any calculation, these figures clearly show that Apple& rsquo;s demand was very elastic. How reliable
do you think this estimate is? What other factors do you think should be taken into account
for a more complete assessment of iPhone& rsquo;s elasticity?

Expert's answer

Provided data has to be considered with caution. This is because other factors, which played a significant role in this situation are:

- Excessive attention to a new revolutionary technology;

- Already existing positive company’s profile on the market.