The article from http://www.isuppli.com/Display Materials and Systems/News/Pages/LCD-TV-Prices Increase as New-Models-Arrive-and-Promotions-Fade.aspx show is based on economic problem, a product like the television brand will cause economic problem when the economy changes. The television brand like the LCD-TV could cause problem to the suppliers like the concept of demand and supply but another concept that relates to the demand and supply is elasticity also could cause economic problem with the price increase in new models. The elasticity is the measurement to study on the changing of an economic variable that will affect others like the supplier sell his product at a low price, how much more he must sell or sell at the high price, how much less he must sell.
The demand side had the price elasticity of demand is a units free measure of responsiveness of the quantity demanded of a good to a change of price when others buying plans are the same. There are three types of elasticity demand, perfectly inelastic demand, unit elastic demand and perfectly elastic demand. For television brand, it is a perfectly inelastic demand and elastic demand, the concept means that there are no changes in the quantities even as the price increases or decreases also had no price range. For example, the Samsung LCD-TV is a one of a kind smart television that had voice control and touch screen and no matter if the price increase or decrease next year, the quantity will never change no matter how many time the consumer buy.
The graph shows how the perfectly inelastic demand works like if the price of the television had increase to the prize of twenty, the quantity will remain at four units. On the other hand, the price of the television is decrease to the prize of ten, the quantity will still remain at four units. This had shows that the elasticity of demand is zero.
The graph shows how the unit elastic demand works, it shows that change in the quantity demanded is equal to percentage changes in the price. Like, the quantity is drop to the two units, it causes by the change of the price. The price elasticity is equal to one.
There are factors that influence the elasticity of demand could cause economic problem. There is the factor of the closes of substitutes mean that the product that had a closet substitute the more elastic the demand could be. This means that if there is a substitute for a product, people will demand it more. For example, the Samsung flat screen had a closest substation like the Sony brand flat screen television. When the Samsung LCD-TV flat had increases its price from $ 1,060 to $ 1.136 in the year 2009 by 7.2%. The demand had decline on the Samsung flat screen and the closest substitute the Sony flat screen will increase in demand.
Another factor is the proportion of income, this depend on the number of income the consumer had made during their work. The factor means that, a consumer who had made more income, the greater the price of elasticity of demand or the less inelastic is the demand for it. For example, at the year 2010, the United States had introduced new model of LCD-TV with enhanced features at the price of $1,136 from $1,060 in June. This does not matter to consumer who had made more income than others and will willing to buy the new LCD-TV. As more consumer who had high income the more elastic the demand is.
There are more factors that influence like time, there are products like the branded ones require a longer time of period to produce. The concept mean that the longer the time period is, the more elastic the product under consideration. For example, the new Samsung LCD-TV smart television had require a long period of time to install all the application like the smart touch remote, a device that use for as a remote to the smart television but as a smart touch to operate the channel.
As for the supply side, elasticity of supply, it is measured by the responsiveness of the quantity supplied to a change of price. As always, there are three types of elasticity supply, perfectly inelastic supply, unit elastic supply and perfectly elastic supply. The supply side of the LCD-TV may face the perfectly inelastic supply and perfectly elastic supply as well.
The graph shows how the perfectly inelastic supply works like if the price of the television had increase to the prize of thirty, the quantity will remain at six units. On the other hand, the price of the television is decrease to the prize of ten, the quantity will still remain at six units. This had shows that the elasticity of supply is zero.
The graph shows how the unit elastic supply works, it shows that change in the quantity supplied is equal to percentage changes in the price. Like, if the price of twenty is drop to the price of ten, the quantity will increase from 4 units to 12 units. The elasticity of supply is equal to one.
There are the factors that influence the elasticity of supply like the resource substitution possibilities. There are some goods and services that are produced made from raw materials that are unique. This can cause problem for suppliers on getting the raw material they need in order to produce their goods. The elasticity for the Samsung smart television is perfectly inelastic supply because it has a low or zero, elasticity of supply. For example, the new smart TV Samsung needs a lot of resources to produce this smart TV like the voice, gesture and facial recognition application or the 46-inch ES80000 that could cost $2000 and even the touch based remote. These raw material could be difficult to produce or maybe even hard to find for the suppliers.
There include the factor of time frame for supply decision, as for the Samsung smart TV it require the long-run supply. For most goods like this one is elastic or perfectly elastic because the smart TV requires a huge amount of time to produce even for one, the supplier will require many resources that could be costly like the Samsung LED model new feature, the virtual keyboard and added application like Facebook or Twitter.
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