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Article: How Apple's Pricey New iPhone X Tests Economic Theory by Josh Zumbrun and Tripp Mickle
1. Based on the information in the article, what are the prices and the costs of components for Apple's new iPhone X and the iPhone 7? Do you think this estimate of cost is a reasonable estimate of the marginal cost for these products? Why or why not?
2. Using the component costs as marginal cost, calculate the elasticity of demand assuming that Apple is profit-maximizing for each product. Are these elasticities in a range that makes sense for many branded products?
3. What is a Veblen good? What is the evidence that the iPhone X is a Veblen good?
4. What is the evidence that the smartphone is not a Veblen good?
5. Why have the prices of new iPhones been successively increasing?
6. What are the possible causes for delays in the release of the iPhone X?
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