As+New+Ipad+Debut+Nears,+Some+see+decline+of+PC's+by+G+Ping+Lee

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= As New IPad Debut Nears, Some see Decline of PC's

=SOURCE:= http://www.nytimes.com/2012/03/06/technology/as-new-ipad-debut-nears-some-see-decline-of-pcs.html?_r=1&ref=portablecomputers

=DATE EXTRACT WAS WRITTEN:= March 5, 2012

=DATE CURRENT EVENT WAS WRITTEN:= March 26, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= Both Apple and Microsoft are global consumer-product companies in which sell products related to personal computers. They are considered to be an oligopoly as both of these markets largely dominate the industry. Since the release of the Apple iPad, the products sales have been on fire. In 2010, the demand for PC's was 20 times that of the demand for Apple iPads. However in 2011, the demand for PC's was only 6 times that of the demand for Apple iPads, and by 2017 it is predicted that Apple iPads would be in larger demand than PC's. In this article it is showing that the demand for PC's is going down, and in turn the demand of Apple iPads is going up. Therefore, it shows that these two products act as substitutes as a rise in demand of one product results in a decrease in demand of another. As the demand for personal computers continue to increase for iPads, and continues to decrease for PC's, in the near future the demand for iPads will be larger in which will allow the Apple company to have a more successful market and become dominant in the personal computer industry. If Apple were to be too dominant over the technology industry, many problems may arise. If Apple dominated the industry, they may create goods at higher prices and lower outputs in order to achieve abnormal profits in the long run. This would then decrease consumers real income as in the age of technology, the demand for iPads or PC's become relatively inelastic thus the purchasing of computers will directly affect the peoples real income. Another problem is that as Apple becomes too large a firm, they may have anti-competitive behavior. This behavior will then cripple the advancement of technology, as less firms compete in this industry, Apple will become content with its products and will not be encouraged to create new products.

=VOCABULARY TERMS AND DEFINITIONS:= > Substitute: a good or service that can easily replace another > Oligopoly: Assumptions: > - Largely dominated by a few firms > - similar, but not identical products > - strong barriers to entry and exit > - interdependent (collusive) > Non-price determinants of demand: Outside factors that do not include price which shifts the demand curve right or left. Includes: taste changes, change in population, change in demographics, government laws. > Abnormal Profits: When there is a surplus of money made for each unti of output > Inelastic: when the price of a product does not affect its demand by much
 * Demand: quantity of a good or service that consumers are willing and able to purchase at all prices at a given time period
 * Long Run= When the factors of production are in its variable stage (planning)
 * Subsidy: a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive

=DIAGRAMS:= Supply Demand Curve of PC's Supply Demand Curve of Apple iPads

Apple Products when under the effect of a Price Ceiling Increase in PPC as the factors of production were improved Subsidizing Microsoft =EVALUATION= If Apple were to dominate the industry it will create many problems. Therefore, it is important for the government to balance the power of Apple. This could be done by placing a price ceiling upon Apple products. This will prevent the company from charging higher prices in order to gain abnormal profits in the long run. This way there will be no possible direct negative effects on the consumers and in fact consumers will have an increase in real income as the prices of Apple products decreases. The problem with issuing a price ceiling is that at that price the amount of the product demanded will be a lot greater than the amount of the product able to be supplied by the producer. This will then create a shortage in Apple products which may not be in favor of consumers.

Another way is to prevent Apple from dominating the industry by increasing the dominance of another competing monopoly, such as Microsoft. This could occur if Microsoft, like Apple, followed the change in tastes of consumers. As consumers have recently begun to prefer tablets, instead of the traditional computer, Microsoft should also develop a tablet in order to attract consumers. The development of a tablet would also pressure Apple into having to creating more technological innovations in order to compete with Microsoft which will only allow society to further advance in technology. The problem with this is that it is often very expensive and time consuming to invest upon inventions such as the creation of a tablet. This money and time could instead be invested in the company, in order to improve its factors of production which allow Microsofts PPC to shift outwards.

A final way would be for the government to issue a subsidy upon microsoft. As the government issues a subsidy for microsoft, it will increase the amount of revenue for the producer by the black shaded area. This extra amount of revenue can then be used to either be used to invest in research which may produce beneficial financial results in the future, or invested in the companies factors of production which will result in immediate benefits. This will allow Microsoft to become more competitive in the market and prevent Apple from becoming too dominant. The problems with issuing subsidies is that every subsidy has a second best alternative. The money used by the government to pay for the subsidies may be used for other things such as road safety, and the military. The money that goes into the subsidy must also come from somewhere. In order to issue a subsidy the government has to either increase taxes or enforce new taxation laws which still causes the people to lose real income.