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Production Changes Essay

1096 words - 5 pages

Apple has decided to cut production on the IPhone 5C and increase production of the IPhone 5S after one month of sales. Sources familiar with Apple have sited a lack in sales for the 5C, which they contribute to the phone being priced to high. Therefore, consumers have been choosing $100 5S, which Apple has asked its suppliers to increase production to keep up with demand. Companies familiar with the production of the 5C have seen a 20% fall in demand, the article says fall in supply, and an rise in the number of orders for the 5S. Consumers are buying the pricier 5S, which is outselling the 5C 2.5 times to 1. Some have indicated that the price gap between the two phones is to narrow, which no one at Apple seems to be concerned about because the 5S is offsetting the 5C lack of sales.
Looking at this article from an economic viewpoint, Apple has seen a fall in the demand of the IPhone 5C and rise in demand for the 5S. The same can be stated for producers of the IPhones, demand for making the 5C has fallen by 20 percent and demand has risen for the 5S. Since demand has fallen for the 5c, then supply will fall to and supply will rise for the 5S.
This decision is in Apples short-run, which they have realized variable cost is too high for the 5C with the amount of return they are currently receiving. They cannot exit from selling the IPhone 5C altogether because they are in the short-run and Apple will still incurs fixed-cost, such as production cost. All Apple could do is cut back on production to the point where marginal revenue equals marginal cost, or even temporary shutdown, but they cannot exit.
The best way to understand this is to look at it through a demand and supply curve. The curve will show us how apple is currently performing and how they expect to perform after the new increases and decreases in production take places. Since Apple is talking about a certain IPhone at a certain price this effects demand not quantity demand and supply not quantity supply.

OIL

As oil and gas price continue to soar in the United States, the natural gas boom surges on. The natural gas boom started in the mid-2000s, and has since revolutionized the way Americans consume energy. However, recent research has led many in the field to believe that the wells tend to lose most of their production only after about one or two years of operation. Therefore, in order to keep up production more wells are being drilled. Many wells behind the boom are losing productivity, and some areas could hit peak levels sooner than expected, experts predicted. Since these wells are hitting their peak potential sooner, companies have started to drill more wells in order to maintain production.
Many of today’s experts have pessimistic views of the oil boom, which a majority comes from a number of so called “sweet spots.” These spots are the ones that are drying up faster than usually and losing productive quicker than expected. Even though productive falls...

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