DD202A

The mechanism of the demand and the supply are considered the core in this
subject and I will justify my answers with examples like the cell phone market in
Kuwait such as the high level of innovation caused to decrease the cost of
production for the product and decrease the price for it, these will increase the
demand for this product.

The positive news for the customers that the price of cell phones will be decreased
through the coming five years .this subject happened because the competition
between the producers will be increased and the supplies will be increased by
them. When the market reaches to the satisfaction point, demand will raise at a
tardy rate. (5% a year till 2015) (IDC,2015,)

The Supply and Demand Diagram for decreasing Mobile Phone Prices.

S1

S2
P1

P2
D2

D1
Q

Q1 Q2

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 According to the international Data Corporation (IDC), The market of cell phoned
in Kuwait reduced by 6% in 2016. There are expectations the market of phones
will be reduced in the coming periods. This estimation will result in big impacts on
the curve of supply and demand because there are estimation which estimated that
the issue of buying the cell phones will reduce at 2016, the Qd will minimize, then
the demand curve will tend to left.

Price of PHONES

Supply curve

P1

P2

D1

D2

Q.D of phones

Q2 Q1

2
 “Indeed, the state of Kuwait majorly rely on the the oil and gas industry as basic
source for the net income. So, we can say that the prices of the oil and gas control
over the economy of the state of Kuwait because the GDP of the nation depend on
the oil sector by 60 % and by 90 % for the revenue from the exporting of the petrol
products. Because of the decreasing in the price of oil crude in the global market
for oil, this negative impacted on the purchasing power in the nation of Kuwait
because the people become have the same ability to purchase. This lead to reduce
the quantity demanded for the oil and the demand curve shift.

Price of PHONES

Supply curve

P1

P2

D1

D2

Q.D of phones

Q2 Q1

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 Factors affecting demand

We can define the individual demand curve as the price that paid by the person in
the market for getting the product.

We can define the market demand curve as the variety or group of individual
demand curves. It elucidates the Q of products that people want to purchase it at
different level of prices.

1. Change in price

The affair of changing in price level of the product will lead to changing over the
Demand Curve.

400

385

370 D

Quantity
20 m 25 m

For example, the prices of iphone 6 reduced from 400 $ to 370 $ as a result of
decision that taken by the management of the apple company. These resulted in
increasing the number of customers from 20 million clients to 25 million through
the markets.

Shifts in the demand curve

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 This matter will occur at the same price in the case that the consumers desire to
purchase a bigger (or lower) Q of goods. If there are shift in conditions of demand ,
this issue will occur.

P
D2

D1

P1

QUANTITY

Q1 Q2

Diagram to display the shift in demand

S
P1

P2
D2

D1
Q.S of tobacco

Q1 Q2

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A shift to the right in the demand curve can occur for a number of reasons:

Income:-the purchasing ability of the customers will be supported and increased

in the case of increasing the income of them. There are many reasons that lead
to increase the income of the people like the overtime and commissions.

Quality: - the people in the market will be encouraged and supported to buy the
product in the case of high quality for the product like the cell phones with high
pixel in the cameras like I phone and Samsung.

The product loyalty and the product demand will be supported and increased in
the case of good advertising. For example, Samsung depend on good campaign
of adverting “Marvel’s Avengers” and make advertisement by large amounts of
money, these lead to increase the sales of the Samsung.

Substitutes: - if the price if cell phones that produced by Samsung increases, the
demand for Apple cell phones will increase.

Complements:- the decrease in the price of Iphone will result in maximize in

the demand for compatible android.

Expectations of future price raises: - the expectation for the price of the cell
phones maximize, the demand for the product in the current time will increase.

The reducing in disposable income will result in the decrease in the demand for the
product. The decrease in the name of the product will lead to decrease the demand
on this product.

Determinants of supply of the mobile phones

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Prices of related goods: - for the factor that produce the cell Phones or Ipad . if the
prices level of the cell phones decrease , the factors will decide to produce the ipad
in quantity more than the mobile phones and vise versa( Pepall & Peter,2016). The
smart watches in the market increased in the prices. This pushed the apple
company to produce the smart watches more than iphone. These reduced the
supply of iphone in the market.

Technology:- the efficiency for production of the company will be supported and
increased in the case of adopting on innovative ways and technology, this lead to
use low small resources to produce. The production of the company will be
supported in the case of decreasing the production cost; this will lead to increase
the supply of the phones in the market. For instance: high grade of technological
changes lead to change in the supply curve for iPhones and move it to the right
side. The equilibrium price minimized and the EQ will increase like tools that
coalesces chips in speed way, these lead to reduce costs of production for Apple
Company and will support or shore up the supply of the iPhone 6.

Prices of inputs: - the supply of the cell phones will be supported and increased in
the case of decreasing the cost of the inputs that used in the production process and
decreasing in the production costs. The production costs of the cell phone will
increase if the cost of inputs increased, this leaded to decrease the quantity
supplied. The platinum and gold are common materials that composed in the
production of iphone. The cost of production for iphone because of the high –
priced of this material, these leaded to reduce the supply of the iphone.

Expectations: - no doubt that the Qs of the cell phone is affected by the expectation
of the people in the market

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Number of sellers: - the quantity supply of the cell phones will be supported and
increased if the numbers of producers of the cell phones increased.

There are different forces that impact on demand and supply of mobile phone
which created by Samsung .the price of the product is the factors that affect that
influence on the decision of the buyer to purchase the product or not. There are
many people use the phones in only contacting with the people, so they don’t need
to purchase the modern phones. The quantity demanded of the cell phones will be
supported in the case of decreasing the price. The next factor is the income of
buyers, the portion of this income used to purchase the cell phone. Eg: the price of
Samsung Note 2 was KD 200, while the average income of the people in our
country is only KD 300 per month. Thus, the demand of this product will be
reduced because the people can’t pay more than half of their salary to purchase the
mobile. The number of buyer plays an important role in this issue. Samsung and
APPLE Company considered as the big competitors in the field of producing
mobile phones. There many people purchases and concerned to purchase the
Samsung S3 at the first and when Apple issued Iphone 5, the customers turn into
their orient and purchase Iphone 5.

In conclusion, it is also apparent that Kuwait is considered high demanded country

for all product and the all global companies in the world concern to supply the
markets in the Kuwait with all product in order to achieve high sales. Different
macro forces and issues are also restraining growth, including the foreseeable
flattening of the market due to minimizing the consumer demand and slowing
population growth (Economics ,2013).

About 60 % supported by the oil and gas sector for the GDP of the state of Kuwait
because the petrol sector represent about 95 percent in the Kuwait’s export

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revenues. The global prices for oil crude diminished and these cause to negative
results on the demand and supply in Kuwait. (odora,2014). This leads to decrease
the demand on the luxury products like the cell phones. So, we can say that the
demand for the cell phones in the Kuwaiti market decreased as a result to the
decrease the oil prices. According to the international Data Corporation, the cell
phones that prices more than $150 are considered higher than growth rate for many
persons in the country.

The market can be supported and supplied with new product like VSun, Xtouch,
and Obi, this will lead to decrease the prices of the phones and lead to existing of
cheap cell phones in the market.

Reference

Arthur O'Sullivan and Steven Sheffrin ,2013,Microeconomics: Principles,

Applications, and Tools (8th Edition)

Denzil ,2015,Microeconomics,ISSN:9628-419-33

Economics ,2013,The Role of Prices: The Forces of Supply and Demand, visited in
07-11-2016, available at:-

https://www.economics.utoronto.ca/jfloyd/modules/sand.html

Lynne Pepall & Peter Antonioni ,2016,Microeconomics For Dummies

Michael Parkin ,2011,Microeconomics (10th Edition) (Pearson Series in

Economics)

MBN ,2014,What are market forces? Definition and meaning, visited in 02-11-
2016, available at:-
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http://marketbusinessnews.com/financial-glossary/market-forces/

The odora,2014,Kuwait economy, , visited in 09-11-2016, available at :-

http://www.theodora.com/wfbcurrent/kuwait/kuwait_economy.html

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