Comments on: Product differentiation in imperfectly competitive markets – the MacBook Wheel http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/ for students and teachers of Economics Wed, 23 May 2012 04:39:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Mirren Mecathum http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22706 Mirren Mecathum Wed, 28 Mar 2012 04:15:46 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22706 Hi Simon, Your answers are good responses. In question 3 you mentioned in my opinion how Apple runs. However, in other computer companies with profit margins that aren’t as high, they might go for lower quality materials. This is why they aren’t up to Apple’s standard, don’t you think so? Hi Simon,
Your answers are good responses. In question 3 you mentioned in my opinion how Apple runs. However, in other computer companies with profit margins that aren’t as high, they might go for lower quality materials. This is why they aren’t up to Apple’s standard, don’t you think so?

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]]> By: Simon Franz http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22470 Simon Franz Thu, 15 Mar 2012 11:57:26 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22470 1) In the demand curves of Apple which we saw in the above post, there is a clearly indicated increase of the demand curve's slope due to a clear product differentiation which was initiated by apple's developers. This is a likely thing to occur because apple has a very loyal customer base who always wants a different product than the mainstream. These customers will pay for the differentiation which actually also is due to a higher quality. With a higher quality approach customers are happy to pay more because they think it is worth the extra money spent. This actually brings a big advantage since apply products therefore have no direct competitors causing no substitutes to being offered on the market. Therefore the apple electronic product market becomes monopolistic causing the products to become inelastic. This effect is shown in the sec on demand curve where the slope of the curve will increase. 2) In my opinion the profits will decrease since other laptop makers will catch up quickly so that apple has to create new advantages with their products in order to maintain the monopolistic market. 3) Companies which always tried to be different mostly made a start with high quality materials and components which are more expensive to use and sell in the first place but since customers are happy to pay the increase of quality and uniqueness it pays out at the end causing long-run profits to be maintained. 1) In the demand curves of Apple which we saw in the above post, there is a clearly indicated increase of the demand curve's slope due to a clear product differentiation which was initiated by apple's developers. This is a likely thing to occur because apple has a very loyal customer base who always wants a different product than the mainstream. These customers will pay for the differentiation which actually also is due to a higher quality. With a higher quality approach customers are happy to pay more because they think it is worth the extra money spent. This actually brings a big advantage since apply products therefore have no direct competitors causing no substitutes to being offered on the market. Therefore the apple electronic product market becomes monopolistic causing the products to become inelastic. This effect is shown in the sec on demand curve where the slope of the curve will increase.

2) In my opinion the profits will decrease since other laptop makers will catch up quickly so that apple has to create new advantages with their products in order to maintain the monopolistic market.

3) Companies which always tried to be different mostly made a start with high quality materials and components which are more expensive to use and sell in the first place but since customers are happy to pay the increase of quality and uniqueness it pays out at the end causing long-run profits to be maintained.

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]]> By: Debbie P http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22460 Debbie P Wed, 14 Mar 2012 21:41:26 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22460 Hello, I totally agree with your perspective on that "people love innovation and do not care about the price but the “freshness” of the product," which I forgot to mention in my post. It is very true that most of the time people do not care about the price of the product when it comes to electrical appliances. Therefore people buy it due to not only that but also brand loyalty. In the end the firm gains and develops into a monopolistic power over the market. Hello,

I totally agree with your perspective on that "people love innovation and do not care about the price but the “freshness” of the product," which I forgot to mention in my post. It is very true that most of the time people do not care about the price of the product when it comes to electrical appliances. Therefore people buy it due to not only that but also brand loyalty. In the end the firm gains and develops into a monopolistic power over the market.

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]]> By: Debbie P http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22459 Debbie P Wed, 14 Mar 2012 21:36:10 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22459 1.In the Apple demand curve graphs found in the blog posting, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen? This happens because knowing that Apple’s new laptop- the MacBook Wheel differentiates from other laptops, consumers will buy thinking it is worth their money. Also, as the product itself is not compared to be a substitute for other laptops, it becomes a monopoly market. The MacBook Wheel itself will become inelastic and therefore the slope of the demand curve graphs will increase like the second graph above. 2.Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run? Assuming the market for laptop computers is monopolistically competitive, most of the product that each firm produce will be similar to one another; in other words, very elastic and easily to substituted. So to maintain its profits in the long run, Apple should continue what they are best at: to create products that differentiates from other firms. Apple should maintain their supernormal profits by creating new desirable products- such as the iPhone and the iPads, so that the consumers will continue buying since their brand loyalty was already built in. 3.What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real? Personally, I am an Apple fan. I liked the idea of touch screen/ big screen and many other shiny products that Apple created over the years. However, I was not in favour of the idea of not being able to type. Therefore, I would not want to purchase this MacBook Wheel. Moreover, just like the news reporter said in the news, that it took the man 45 minutes to type an email to his friend using the MacBook Wheel which proves that it is unpractical. Even though this product is innovative and meant to be simple, I still think it is too simple. 1.In the Apple demand curve graphs found in the blog posting, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen?
This happens because knowing that Apple’s new laptop- the MacBook Wheel differentiates from other laptops, consumers will buy thinking it is worth their money. Also, as the product itself is not compared to be a substitute for other laptops, it becomes a monopoly market. The MacBook Wheel itself will become inelastic and therefore the slope of the demand curve graphs will increase like the second graph above.

2.Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run?
Assuming the market for laptop computers is monopolistically competitive, most of the product that each firm produce will be similar to one another; in other words, very elastic and easily to substituted. So to maintain its profits in the long run, Apple should continue what they are best at: to create products that differentiates from other firms. Apple should maintain their supernormal profits by creating new desirable products- such as the iPhone and the iPads, so that the consumers will continue buying since their brand loyalty was already built in.

3.What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real?
Personally, I am an Apple fan. I liked the idea of touch screen/ big screen and many other shiny products that Apple created over the years. However, I was not in favour of the idea of not being able to type. Therefore, I would not want to purchase this MacBook Wheel. Moreover, just like the news reporter said in the news, that it took the man 45 minutes to type an email to his friend using the MacBook Wheel which proves that it is unpractical. Even though this product is innovative and meant to be simple, I still think it is too simple.

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]]> By: Nadiya S http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-2/#comment-22437 Nadiya S Wed, 14 Mar 2012 00:23:01 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22437 Hey :) While I agree that the Macbook wheel would be inconvienient and I would not buy it. I don't think its necesary to be against Apple products because they are Apple products. I personally have a Toshiba and I am happy with it....but if I had a need for a better laptop, I would go for Apple, because they do have good quality products....while it is important to watch out for products such as the Wheel, I still think it is important to apreciate, the good products they have come up with. Hey :)
While I agree that the Macbook wheel would be inconvienient and I would not buy it. I don't think its necesary to be against Apple products because they are Apple products. I personally have a Toshiba and I am happy with it….but if I had a need for a better laptop, I would go for Apple, because they do have good quality products….while it is important to watch out for products such as the Wheel, I still think it is important to apreciate, the good products they have come up with.

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]]> By: Nadiya S http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22436 Nadiya S Wed, 14 Mar 2012 00:18:03 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22436 2.Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run? If Apple were in a monopolistically competitive market, Apple would not be able to make super-normal profits. Thus Apple would have to continue being innovative, and would have to further differentiate themselves from other firms in order to stay on top and to achieve the supernormal profits it strives for. 3.What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buys a MacBook Wheel if it were real? Apple has done several things in the past to achieve differentiation. For example, they came out with the Macbook Air, the lightest and the thinnest laptop ever created. This made them standout. Apple computers are extremely resilient to viruses…a great bonus! I would definitely NOT buy a Macbook Wheel if it existed….to me, it looks like a huge iPod….why do I need such a big wheel? Sure its innovative….but its TOO simple…and it looks very inconvenient…how long would it take me to type my assignments? Forever. 2.Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run?
If Apple were in a monopolistically competitive market, Apple would not be able to make super-normal profits. Thus Apple would have to continue being innovative, and would have to further differentiate themselves from other firms in order to stay on top and to achieve the supernormal profits it strives for.

3.What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buys a MacBook Wheel if it were real?
Apple has done several things in the past to achieve differentiation. For example, they came out with the Macbook Air, the lightest and the thinnest laptop ever created. This made them standout. Apple computers are extremely resilient to viruses…a great bonus!
I would definitely NOT buy a Macbook Wheel if it existed….to me, it looks like a huge iPod….why do I need such a big wheel? Sure its innovative….but its TOO simple…and it looks very inconvenient…how long would it take me to type my assignments? Forever.

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]]> By: Nadiya S http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22435 Nadiya S Wed, 14 Mar 2012 00:13:31 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22435 1.In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen? The slopes of the demand curves increase after successful product differentiation, because the curve is becoming more inelastic. With each new product, Apple consumers become more and more loyal to Apple. As one of the consumers said in the article “I would buy almost anything created by Apple”, this just shows what an amazing reputation Apple has built up for themselves. As the demand curve becomes more inelastic, consumers will buy the products even at a very high price, the wheel’s price was over 2, 600! But consumers don’t seem to mind. 1.In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen?
The slopes of the demand curves increase after successful product differentiation, because the curve is becoming more inelastic. With each new product, Apple consumers become more and more loyal to Apple. As one of the consumers said in the article “I would buy almost anything created by Apple”, this just shows what an amazing reputation Apple has built up for themselves. As the demand curve becomes more inelastic, consumers will buy the products even at a very high price, the wheel’s price was over 2, 600! But consumers don’t seem to mind.

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]]> By: nvirani2 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22103 nvirani2 Sun, 26 Feb 2012 23:28:29 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22103 I agree with the fact that Apple creates new products that are ahead of other brands. For example, they created the iPad before any other brand did. We all know that the other brands simply copied them and are possible selling their versions of the Ipad for a lower price. I am also not a fan of not having a keyboard; however, i also think others could be drawn to it. (Ironically enough i have an iphone) Thanks! I agree with the fact that Apple creates new products that are ahead of other brands. For example, they created the iPad before any other brand did. We all know that the other brands simply copied them and are possible selling their versions of the Ipad for a lower price.
I am also not a fan of not having a keyboard; however, i also think others could be drawn to it. (Ironically enough i have an iphone)
Thanks!

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]]> By: nvirani2 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22102 nvirani2 Sun, 26 Feb 2012 23:23:23 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22102 1. The production cost increases and therefore the price increases. There is another product that apple has to sell and therefore they will be increasing the price they are paying in order to create it. 2. Over time the economic profit will decrease; however, if they continue to produce new products, their profit will continue to be abnormal. 3. Apple has a unique, sleek and modern look to their computers. This draws the consumers in. They have many different products that cater to different needs and age groups. They also had innovative technology. They make sure all their customers are happy with the products they are buying so they don’t sell them the wrong item. This makes the customers want to come back and purchase more products. 1. The production cost increases and therefore the price increases. There is another product that apple has to sell and therefore they will be increasing the price they are paying in order to create it.

2. Over time the economic profit will decrease; however, if they continue to produce new products, their profit will continue to be abnormal.

3. Apple has a unique, sleek and modern look to their computers. This draws the consumers in. They have many different products that cater to different needs and age groups. They also had innovative technology. They make sure all their customers are happy with the products they are buying so they don’t sell them the wrong item. This makes the customers want to come back and purchase more products.

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]]> By: Sebastian VW http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22086 Sebastian VW Sun, 26 Feb 2012 14:56:40 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22086 In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen? Since Apple differentiates its products from other products in the market, is there a smaller group of substitutes for Apple laptops. Therefore, the demand becomes more inelastic, giving the curve an increase of its slope. Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run? If the market is monopolistically competitive, this means that they will make normal economic profits. Though Apple wants to make abnormal profits, so they will have to differentiate their products from the products in the market to maintain their profits. What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buys a MacBook Wheel if it were real? A few days ago, I saw this laptop: <a href="http://www.engadget.com/2012/02/22/razer-blade-review" rel="nofollow">http://www.engadget.com/2012/02/22/razer-blade-re...</a> It is so different that all the other laptops. It has a 4 inch touchpad with LCD screen, in stead of the normal mousepad. Also it has several buttons to be customized to the user's preference. So if you're a gaming person, you put your favourite 10 games in those buttons. But if you're more a websurfing person, you can put your ten favourite websites in the buttons. They manufacturers have differentiated their laptop from all the ordinary laptops. If the MacBook Wheel were real, I would absolutely NOT buy it. The way you should type with it is the most horrible system I have ever seen. I type 120 characters per minute, with that I would type maybe 10 per minute. It slows the typing down. Also, if I would have the choice between a normal MacBook and a MacBook Wheel, I'd chose the regular one, because it has a keyboard, and thus I could work better with it. In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen?

Since Apple differentiates its products from other products in the market, is there a smaller group of substitutes for Apple laptops. Therefore, the demand becomes more inelastic, giving the curve an increase of its slope.

Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run?

If the market is monopolistically competitive, this means that they will make normal economic profits. Though Apple wants to make abnormal profits, so they will have to differentiate their products from the products in the market to maintain their profits.

What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buys a MacBook Wheel if it were real?

A few days ago, I saw this laptop: http://www.engadget.com/2012/02/22/razer-blade-re…
It is so different that all the other laptops. It has a 4 inch touchpad with LCD screen, in stead of the normal mousepad. Also it has several buttons to be customized to the user's preference. So if you're a gaming person, you put your favourite 10 games in those buttons. But if you're more a websurfing person, you can put your ten favourite websites in the buttons. They manufacturers have differentiated their laptop from all the ordinary laptops.
If the MacBook Wheel were real, I would absolutely NOT buy it. The way you should type with it is the most horrible system I have ever seen. I type 120 characters per minute, with that I would type maybe 10 per minute. It slows the typing down. Also, if I would have the choice between a normal MacBook and a MacBook Wheel, I'd chose the regular one, because it has a keyboard, and thus I could work better with it.

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]]> By: klake2 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-22001 klake2 Wed, 22 Feb 2012 04:04:16 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-22001 1 It happens because of the differentiations that make the product luxurious and more unique than over brand. Also because of the brand name, people will rely more on Apple than other brand product. These facts will make the demand for Apple increase. 2. Assuming the market for laptop is monopolistic competitive, Apple will make normal profit as many companies will enter the market. In the long run the price of the product will go down until normal profit but if Apple wants to maintain its actual profit they should continue to diverse the variety of their products. 3. Apples computer does not only change their design but it also improved its software or the quality of the computer. Therefore every new version of Apple computers is a better version of the previous one. Consumers will be interesting in those new qualities. But I guess if i didn’t already have a Mac I would of bought it. However most of the people just need a simple computer and don’t need all of the software that Apple can provide. So I guess if I am happy with mine I would not buy the new version. Also some people feel like they need to have the new version or every new gadget that a Mac can provide, they are kind of addicted to the product and will buy this new version if it exist. 1 It happens because of the differentiations that make the product luxurious and more unique than over brand. Also because of the brand name, people will rely more on Apple than other brand product. These facts will make the demand for Apple increase.

2. Assuming the market for laptop is monopolistic competitive, Apple will make normal profit as many companies will enter the market. In the long run the price of the product will go down until normal profit but if Apple wants to maintain its actual profit they should continue to diverse the variety of their products.

3. Apples computer does not only change their design but it also improved its software or the quality of the computer. Therefore every new version of Apple computers is a better version of the previous one. Consumers will be interesting in those new qualities. But I guess if i didn’t already have a Mac I would of bought it. However most of the people just need a simple computer and don’t need all of the software that Apple can provide. So I guess if I am happy with mine I would not buy the new version. Also some people feel like they need to have the new version or every new gadget that a Mac can provide, they are kind of addicted to the product and will buy this new version if it exist.

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]]> By: Brian Greggs http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-2/#comment-21987 Brian Greggs Tue, 21 Feb 2012 21:54:33 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-21987 I agree with what you said in part 3 about the products being almost addictive. Apple does a good job making their products fashionable, which helps with their demand. I agree with what you said in part 3 about the products being almost addictive. Apple does a good job making their products fashionable, which helps with their demand.

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]]> By: Brian Greggs http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-21986 Brian Greggs Tue, 21 Feb 2012 21:51:45 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-21986 In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen? The slopes of the demand curves increase because Apple, by creating a revolutionary product, eliminates the presence of competition, and therefore the demand becomes more inelastic. Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run? Apples short-run supernormal profits will be normalized soon after the competitors catch up. Apple must continue to release revolutionary products so that they differentiate themselves from the competition. What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real? Apple continuously ensures that their products are more advanced than their previous lines, and also the similar products made by their competitors. This way each of their products is differentiated and receives a lot of attention in the media. Personally I would not buy a MacBook Wheel as I prefer the convenience of a keyboard, but I can understand how others would be drawn to it. In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen?

The slopes of the demand curves increase because Apple, by creating a revolutionary product, eliminates the presence of competition, and therefore the demand becomes more inelastic.

Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run?

Apples short-run supernormal profits will be normalized soon after the competitors catch up. Apple must continue to release revolutionary products so that they differentiate themselves from the competition.

What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real?

Apple continuously ensures that their products are more advanced than their previous lines, and also the similar products made by their competitors. This way each of their products is differentiated and receives a lot of attention in the media.
Personally I would not buy a MacBook Wheel as I prefer the convenience of a keyboard, but I can understand how others would be drawn to it.

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]]> By: Jackson Truex http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-2/#comment-21984 Jackson Truex Tue, 21 Feb 2012 20:36:32 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-21984 Your response was very clear and to the point. I like your answer to the last question. I never thought about the fact that firms can differentiate their products with their respective logo. I think that it is important that companies differentiate themselves in all aspects. Your response was very clear and to the point. I like your answer to the last question. I never thought about the fact that firms can differentiate their products with their respective logo. I think that it is important that companies differentiate themselves in all aspects.

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]]> By: Jackson Truex http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-3/#comment-21983 Jackson Truex Tue, 21 Feb 2012 20:34:02 +0000 http://welkerswikinomics.com/blog/2009/01/28/product-differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/#comment-21983 1.)In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen? The slope of the demand curve increases due to the fact that the demand curve is becoming more and more inelastic. This occurs due to the fact that Apple differentiates its products. Their products are becoming less and less like the products that are being manufactured by other firms. This means that there are fewer substitutes for Apple’s products. When there are no substitutes for a product, the demand inelastic. This is why the demand curve increases. 2.)Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run? If the market for laptops became monopolistically competitive, Apple would develop normal economic profits in the long run. This means that the company would no longer make supernormal profits. If Apple wanted to maintain supernormal profits in the long run, it would have to continue to distinguish its products. This way there would be no substitute for Apple products and they would develop a monopoly power over other firms and it would maintain supernormal profits. 3.)What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real? Many firms have used different strategies in order to differentiate their products. I think the only important strategy that needs to be employed is the fact that you need to produce something different. An ice cream shop would want to put out a new flavor that is only available at their shop. This would mean that there were no substitutions for this flavor. I would most defiantly not buy a MacBook Wheel. It seems new, innovative and creative but at the same time very inconvenient. I do not think it would be practical for everyday use. I feel like it would be very successful regardless due to the fact that Apple has such a large group of followers that support their products. They have never really failed with a single product. 1.)In the graphs above, the slopes of the demand curve increases after successful product differentiation by Apple. Why does this happen?
The slope of the demand curve increases due to the fact that the demand curve is becoming more and more inelastic. This occurs due to the fact that Apple differentiates its products. Their products are becoming less and less like the products that are being manufactured by other firms. This means that there are fewer substitutes for Apple’s products. When there are no substitutes for a product, the demand inelastic. This is why the demand curve increases.
2.)Assuming the market for laptop computers is monopolistically competitive, what will likely happen to Apples economic profits over time? What must Apple do if it wishes to maintain its profits in the long-run?
If the market for laptops became monopolistically competitive, Apple would develop normal economic profits in the long run. This means that the company would no longer make supernormal profits. If Apple wanted to maintain supernormal profits in the long run, it would have to continue to distinguish its products. This way there would be no substitute for Apple products and they would develop a monopoly power over other firms and it would maintain supernormal profits.
3.)What are some real ways companies like Apple and its competitors have attempted to differentiate their products over the years? Would YOU buy a MacBook Wheel if it were real?
Many firms have used different strategies in order to differentiate their products. I think the only important strategy that needs to be employed is the fact that you need to produce something different. An ice cream shop would want to put out a new flavor that is only available at their shop. This would mean that there were no substitutions for this flavor. I would most defiantly not buy a MacBook Wheel. It seems new, innovative and creative but at the same time very inconvenient. I do not think it would be practical for everyday use. I feel like it would be very successful regardless due to the fact that Apple has such a large group of followers that support their products. They have never really failed with a single product.

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