One of the products that have been contributing to the growth of the U.S. economy is the iPhone 6 plus
In the year 2015, the sales from iPhone 6 formed 10% of the economic growth and 0.3% of the GDP change in America (Ross, 2017). However, over the years, the sale of iPhone 6 plus has been affected by different economic factors and situations evident in the market. The research paper discusses the economic influences of the iPhone 6 with a major focus on employment, recession, and inflation effects. First, it is important to understand the effect of economic fluctuations of the sale of the iPhone 6 plus
How economic fluctuations affect the sale of the iPhone 6 plus
Economic fluctuations such as recession, flooding of the smartphone market, and the decline of the U.S. dollar influence the sale of the iPhone 6 plus. In the recent trend, the sales of iPhone 6 plus have been going down dues to saturation of the smartphone market and dependence on one market expansion, China to boost the sales growth (Bloomberg, 2016). Other companies such as Samsung have been in the market and making a great impact in the smartphone industry through innovation and new model releases every time. The competition is high. The recession is affecting the sales of iPhone 6 plus due to the slowing down the spending capacity of consumers in all the countries including China, Brazil, Japan, Russia and Canada (Bloomberg, 2016). Many of the economies in the world are facing a recession that is negatively influencing the consumer spending habits. A reduction in spending on iPhone 6 plus means that the sales go down and the vice versa is true. Further, inflation effects on the U.S. dollar are affecting foreign currencies and reducing the revenues earned by citizens. Low revenues earned means reduced purchasing power of customers on iPhone 6 plus and therefore, the sales also change downwards. Further, the shift in the currency rates make the Apple Company increase the price of iPhone 6 plus to maintain its profitability in the market and this is making it difficult for consumers to afford.
The type of unemployment that would result if the economies of the United States and China began to contract and why
The U.S. and China are the major manufacturers, distributors and sellers of the iPhone 6 plus to all other markets in the world. The contraction of these economies due to decreased sales of the iPhone 6 would cause the cyclical type of unemployment that occurs as a result of reduced demand for products in the market (McConnell, Brie, Flynn, 2012). Unemployment has a strong lick to the business cycle since the demand for labor comes from the demand for goods in the market. Therefore, a contraction in the economies of the U.S. and China will result to a cyclical type of unemployment because the demand for iPhone 6 plus will fall dramatically and force the businesses in this countries to lay off a huge number of employees to cut the costs of labor. More unemployed people will further lower the demand for iPhone 6 plus in these markets due to reduced consumer purchasing power.
The four causes of unemployment and whether or not any of the causes of employment affect the market of the iPhone plus 6
The four causes of unemployment include frictional, structural, cyclical and technological (McConnell et al., 2012). Frictional unemployment is voluntary whereby job vacancies are many that people available to fill it. The citizens switch mostly from one job to another and leaving positions for new entrants to the labor market. Structural unemployment is a long-term demand in an industry hence leading to fewer jobs available in a sector and the demand for labor falls down leaving many people unemployed. A mismatch in skills and needs of the new job opportunities causes unemployment. Cyclical unemployment is one that occurs when the demand for goods and services for a business declines. The demand-deficient situation causes unemployment for people due to reduced growth in a sector and business that lead to immense lay-offs of workers to maintain profits as much as possible. Technological unemployment leads to more people not employed due to innovation displacing workers. Therefore, periods of increased unemployment will occur when there are technological innovations to replace people in an industry or business.
When relating the causes of unemployment to the case of iPhone 6 plus, it is evident that the lack of demand for goods and services will cause cyclical unemployment. Low demand for goods and services will lead to reduced sales, slowing down the growth of the Apple Company and business failure in the future, hence the need to dismiss many of its workers.
How unexpected inflation in the United States would affect the sale of the iPhone 6 plus
Unexpected inflation takes place during a time when people are not aware that there is a possibility of inflation occurring until there is an increase in the general increase in prices. In the U.S., unexpected inflation would affect the sale of the iPhone 6 plus negatively. The consumers experienced reduce d purchasing power due to an increase in the dollar value. Since they have fixed incomes, consumers will not have more money to buy the iPhone 6 plus. Therefore, the Apple Company will make loses on the iPhone 6 plus due to unexpected inflation.
Conclusion
In conclusion, the iPhone plus 6 is a promising product for growth in the U.S. and Chinese markets. However, economic fluctuations such as inflation, unemployment, and recession affect its sales negatively. When the economies of the U.S. and China begin to contract, it means that the unemployment that will result in the iPhone 6 plus market is cyclical. There will be reduced demand for iPhone 6 plus by consumers due to recession in these countries. Reduced demand for goods and services means a reduced demand for labor in the industry; hence, more layoffs will occur causing unemployment to the people. Unexpected inflation in the U.S. will also cause a decline in the sales of iPhone 6 plus. Even though the price of the product may not increase immediately, the purchasing power of consumers is affected negatively due to a decline in the dollar value that results in lower wages.
References
Bloomberg. (2016, January). Apple feels effects of new world economic environment as iPhone sales slow. The National Business. Retrieved from https://www.thenational.ae/business/apple-feels-effects-of-new-world-economic-environment-as-iphone-sales-slow-1.219577
McConnell, C., Brie. S., " Flynn, S. (2012). Economics: Principles, problems, and policies. McGraw-Hill/Irwin.
Ross, S. (2017, October). The economics of an iPhone (AAPL). Investopedia. Retrieved from https://www.investopedia.com/articles/investing/022316/economics-iphone-aapl.asp
