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  1. 1. Apple Computers, Inc. <ul><li>Anthony Rizzo </li></ul><ul><li>Toni Simonini </li></ul><ul><li>Sandy Simoneaux </li></ul>
  2. 2. Table Of Contents <ul><li>History – Sandy Simoneaux </li></ul><ul><li>What is Economics? – Sandy Simoneaux </li></ul><ul><li>Factors of Production – Sandy Simoneaux </li></ul><ul><li>Opportunity Cost – Sandy Simoneaux </li></ul><ul><li>Elasticity – Toni Simonini </li></ul><ul><li>Supply – Toni Simonini </li></ul><ul><li>Demand – Toni Simonini </li></ul><ul><li>Price Discrimination –Toni Simonini </li></ul><ul><li>Monopoly – Anthony Rizzo </li></ul><ul><li>Monopolistic Competition – Anthony Rizzo </li></ul><ul><li>Profit – Anthony Rizzo </li></ul><ul><li>Oligopoly – Anthony Rizzo </li></ul>
  3. 3. History of Apple Computers <ul><li>Formed April 1, 1976 </li></ul><ul><li>Developed from the Apple I to the iMac </li></ul><ul><li>The Apple II revolutionized the computer world in 1977 and reinvented the personal computer with the Macintosh in the 1980’s. </li></ul><ul><li>The company has a total of 50 retail stores located in 24 states and is based in Cupertino, California. </li></ul><ul><li>It also has many locations worldwide in both North and South America, Japan and Europe. </li></ul><ul><li>Steve Wozniak and Steve Jobs </li></ul>
  4. 4. What Is Economics? “The Science of Choice” <ul><li>Economics is the study of how society chooses to allocate its scarce resources in order to satisfy unlimited wants and needs. </li></ul><ul><li>Scarcity: A situation in which the amount of something available is not sufficient to satisfy the desire for it. </li></ul>
  5. 5. How does economics affect Apple Computers? <ul><li>Apple must decide how to allocate its resources in order to satisfy present and future wants and needs of the company. </li></ul>
  6. 6. Factors of Production <ul><li>Land </li></ul><ul><li>Labor </li></ul><ul><li>Entrepreneurial Activity </li></ul><ul><li>Capital </li></ul><ul><ul><li>Human Capital </li></ul></ul><ul><ul><li>Physical Capital </li></ul></ul>
  7. 7. Opportunity Cost <ul><li>Definition of Opportunity Cost- </li></ul><ul><ul><li>The value of the next best alternative which must be given up in order to get something. </li></ul></ul><ul><li>Opportunity Cost of Apple Computers- </li></ul><ul><ul><li>Rent </li></ul></ul><ul><ul><li>Revenue </li></ul></ul>
  8. 8. Opportunity Cost (Cont.) $ 1,499 $ 1,489 $ 1599 $ 1639.99 $ 1,989 $ 1,149 $ 848.98 $ 1,039 $ 999.98 $ 1,265.00 Prices of Notebook Computers Prices of Desktop Computers Dell IBM Compaq Sony Apple
  9. 9. ELASTICITY <ul><li>Measure of responsiveness. </li></ul><ul><ul><li> % Δ Quantity Demanded </li></ul></ul><ul><li> % Δ Price </li></ul>
  10. 10. Estimates of Elasticity <ul><li>The number of closeness of substitutes. </li></ul><ul><li>The fraction of the budget. </li></ul><ul><li>The time period. </li></ul>
  11. 11. SUPPLY AND DEMAND <ul><li>Always remember that a change in price of an item will NEVER NEVER NEVER cause a change in the Demand or Supply curve. It may cause a change in the quantity demanded/supplied of the item. - Dr. Gregor </li></ul><ul><li>Change in Demand and Supply curves are caused by the ceteris paribus factors. </li></ul>
  12. 12. * SUPPLY * <ul><li>Supply is the relationship showing the various amounts of an item that sellers are willing and able to make available for sale at various possible alternative prices, during a given period of time. </li></ul><ul><li>Price and quantity supplied are positively related. </li></ul>Supply P Q
  13. 13. Ceteris Paribus Factors of Supply <ul><li>Input Prices </li></ul><ul><li>- as input prices increase, decrease in supply occurs </li></ul><ul><li>Expectations of Sellers </li></ul><ul><li>Technology </li></ul><ul><ul><li>Changes in technology will increase the supply of apple computers </li></ul></ul><ul><li>Number of sellers </li></ul><ul><li>- more firms enter the market, the more competition. </li></ul><ul><li>Prices of Alternative Goods </li></ul>
  14. 14. DEMAND <ul><li>Demand is the relationship showing the various amounts of an item which buyers are willing and able to purchase at various possible prices, during a given period of time. </li></ul><ul><li>Price and Quantity are inversely related. </li></ul>Demand P Q
  15. 15. Ceteris Paribus Factors for Demand <ul><li>Income </li></ul><ul><ul><li>If the income increases, then demand for apple computers increases. </li></ul></ul><ul><li>Number of Consumers </li></ul><ul><ul><li>The more consumers, the greater the demand. </li></ul></ul><ul><li>Tastes </li></ul><ul><li>Expectations of buyers </li></ul><ul><li>Price of related goods </li></ul>
  16. 16. Demand <ul><li>The demand for Apple’s new wireless computer service, Apple 802.11g , has been increasing because consumers are more interested in the newest and efficient technology rather then price. </li></ul><ul><li>Largest demand for Apple 802.11g, would appear to be among graphic artists and other design professionals. </li></ul>
  17. 17. Demand of iMac <ul><li>Apple’s iMac computers were popular in 1998, but within the last three years the demand for these computers have been declining. </li></ul><ul><li>To increase demand Apple is creating a better iMac to meet up to people’s expectations once again. </li></ul>
  18. 18. Price Discrimination <ul><li>Apple offers discounts to students and faculty of educational institutions. </li></ul><ul><li>A certain percentage is deducted from the total cost of an item. </li></ul><ul><li>People who don’t belong to this group of students or teachers are not eligible for a discount. </li></ul>
  19. 19. Monopolistic Competition <ul><li>Two main operating systems: Windows and MAC Operating system </li></ul><ul><li>Windows operating system is used by most computer manufactures. Ex.: Gateway, Dell, and Compaq. </li></ul><ul><li>Apple computers are the only ones that use MAC Operating system. </li></ul>
  20. 20. Problems With This… <ul><li>Macintosh is at a disadvantage because all other computer companies use Windows. </li></ul><ul><li>This causes many new software and products to be Windows compatible only. </li></ul><ul><li>Therefore, Apple is forced to accept Windows programs on their own operating system to stay in competition. </li></ul>
  21. 21. Problems Continued… <ul><li>Companies that use Windows can sell their computers at competitive prices causing Windows computers to have lower prices than Apple Computers. </li></ul><ul><li>Apple computers must lower their prices in the industry to stay in business. </li></ul><ul><li>Windows has no close substitute so to speak. </li></ul>
  22. 22. Profit Accounting Profit vs. Economic Profit
  23. 23. <ul><li>Accounting Profit takes into account only explicit costs </li></ul><ul><li>Revenue-Total Cost= Profit </li></ul><ul><li>Always more than Economic Profit. </li></ul>Accounting Profit
  24. 24. Economic <ul><li>Economic Profit takes into account explicit and implicit costs </li></ul><ul><li>Economic Profit equals Accounting Profit-Implicit Costs </li></ul>
  25. 25. Examples of Implicit Costs <ul><li>The value of land belonging to Apple as reported on the SEC filing December 28, 2002 was $344,000,000. </li></ul><ul><li>The lost revenue from not renting out this land to tenants would be an implicit Cost </li></ul><ul><li>Apple Computer has Machinery, equipment and software worth - $342,000,000 </li></ul><ul><li>The money lost from not leasing this equipment to another company is another example of an Implicit Cost </li></ul>
  26. 26. Economic Profit <ul><li>An example of The Economic Profit of Apple Computer would be its Accounting Profit minus implicit costs, such as the money the company loses from using its factory instead of renting it out. </li></ul>
  27. 27. Oligopoly <ul><li>A market dominated by a small number of firms </li></ul>
  28. 28. <ul><li>Since Apple has only a few competitors the market that the company is in is considered an oligopoly </li></ul>
  29. 29. Market Share <ul><li>Apple Computer Sales make up 10-20% of the computer market share. </li></ul>
  30. 30. Competitors <ul><li>Apple Computer’s competitors include Dell, Gateway, Sony, Hewlett Packard, and Compaq </li></ul>
  31. 31. Conclusion <ul><li>Apple Computers is a company to which we can apply the lessons we have learned in microeconomics. </li></ul><ul><li>By doing so, we are now able to better understand their company. </li></ul>
  32. 32. Any Questions?