Analysis of the personal computers market from the microeconomics` Essay

Analysis of the personal computers market from the microeconomics` perspective - Essay Example A great number of competing producers There are many competing producers waiting for their chance towards competitive advantage, leading to the exploitation of price that could offer more significant customers’ advantage. This is based on the idea of Porter that the overall cost leadership could lead to competitive advantage because its bottom line is about the ability of each producer to set a competitive price for their actual product or service offering (Porter, 1998). As the competition increases, more producers are capable of offering their products or services at a remarkably lower price just to ensure their competitive edge and to guarantee a fundamental market share. This significantly happens in the market for personal computers. To cite an instance, it is not only Apple Incorporated that has the potential to produce personal computer products, but there are other companies around the world of the same industry, both local and international that are also capable of pr oducing the same offerings and present them at lower prices. Based on the concept of the law of demand, a lower price is enticing from the point of view of customers. Thus, it is a natural market response to increase their demand especially for products that are of greater value for them and set at lower prices. According to law of demand, customers tend to find substitute products just to enjoy the benefit of acquring low prices. On the other hand, the price should therefore be obviously lower in the case of products with high volume of supply. This idea is relevant to the associated concept of the law of supply. In other words, the market for personal computer because of a healthy... This paper primarily focuses on the process of price formation in the personal computers industry under the condition of free market. Both laws of demand and supply are under consideration. In this paper, there is an critical analysis of the important factors that are actually contributing to the downward fall of the market price for personal computers even in the midst of increasing demand for them. The dynamic changes in today’s economy leads to the increasing demand for various technologies. This connects us to the prevailing requirement for personal computers. The business for making personal computers would therefore make sense and this is the reason why many producers try to surface from time to time and even create vibrant improvements. The law of supply states that when there is a higher price involved, producers are more willing to produce more, and less if the associated price is low The law of demand on the other hand states that the demand for a product or service offering is higher if people could afford it through a lower price, which means they are not more likely to buy something with a higher price, provided nothing changes As the demand for personal computers increases, the market price decreases because this could be clearly due to the increase of supply linked up with the great number of competing producers that are capable of adjusting the final price of their actual product offerings, leaving the advantage to the target customers. The laws of demand and supply effects on the computer prices are illustrated in the figures in the article.