The variable costs. The degree of competition

The
demand for the smartphones is influenced by various factors. The price of the
commodity is very crucial whereby a decrease in prices of the product leads to an
increase in demand because there is an increase in the satisfaction level of
the buyers. Expectation of changes in future prices. If the price of the phones
is expected to rise in future, the customers will buy more presently so that
they may not spend more in the near future. Moreover, if a new smartphone
matches the taste of the customers, its demand will increase. The consumer
income also plays a major role since whenever the wages are increased, demand
for the product rises as it is affordable.

Supply
of the items is affected by price whereby they are directly proportional. If
the price of the product increases, the supply rises gradually. However, if the
cost of production increase, the supply is minimised. Advanced technology leads
to increased production which further increases the production of the phones in
response to the demand in the market. Moreover, if the cost of production increases,
it reflects a decrease in supply of the essential products to the esteemed
buyers.

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            The prices of the product vary and
are determined by competitors such as the Nokia industry. It is important to
lower prices so as to gain customer loyalty considering that the same items are
available in the market from different organizations. However, the company
should consider the costs involved in production that is the fixed and variable
costs. While determining the prices, the firm should be able to recover both
the fixed and variable costs.

The
degree of competition is also important. If the level of competition from
different firms is high, the prices should be low in order to make sales and
reach the set targets. Furthermore, whenever intermediaries are involved, the
price the merchandise rises. There are government laws and regulations which
protect the consumers and a marketer has to consider these laws before adjusting
any prices.

The
revenue of an organization is the money that is earned from selling its
products. If the price of smartphones increases, clients will most probably
think that it is of lesser value and the probability of spending the money on
other items is high. This reveals that the higher the prices the lower the
sales. Considering price elasticity of demand, increase in price lead to large
decrease in demand. Moreover, if the factors of production are readily
available, the revenue generated will increase due to increased production.