The Economic Concept of Maximizing Utility
The question selected for the discussion is, "Why are the premium electronic products of big MNCs such as mobile phones and laptops overpriced in the market compared to its competitors?"
The usage of advanced technology through various devices such as mobile phones, laptops, computers, wrist watches, and others among the people in the world makes a significant impact on the country's economy. The global electronic products market is on a rapid rise and uses advanced technologies introduced for the consumers and for increasing the company's revenue (Kosimov and Ruziboyeva 2022). The economic concept that the big MNCs uses for selling the products in the market is maximizing the utility to maximize the satisfaction level of the consumers. The satisfaction of the consumers is maximized by providing advanced electronic products at regular intervals in the market. The high price of the premium electronic products offered in the market involves various external and internal factors that are present in the economy (Frank 2006). The factors are the high cost involved in the research and development of the technology of the products, the closed system used by the company in the products and services and the high level of security provided by the company to the consumers (Banga 2022). The company uses the economic theory of supply and demand to increase its customer base globally and increase the number of products sold. For example, The United States of America-based company apple incorporated creates demand globally in the market off its products such as phones and laptops. It can also supply many products and services in the market (Loonam and Regan 2022).
Moreover, the usage of a closed system in the software of all the company's products it creates is a unique feature in the market and enjoys a high level of competency above its competitors in the market. Another major reason behind the overpricing of premium electronic products globally is providing the most advanced technology indie products offered to the consumers (Luo 2022). Some of the portions of overpricing of the premium electronic products are also contributed by the premium look of the products offered to the consumers in the market. The premium electronic products offered to the customers in the market also provide the world-class security software installed in the products. To provide such a higher level of security in the products, the organization spends a lot of money developing the software that directly impacts the cost of the products and services offered in the market. Lastly, the company's profit margin plays a significant role in the increased price of the products and services for the consumers. As the operations of the company is expanded into other countries, the cost of running the company and conducting the activities increases (Doh, Dahan and Casario 2022). This affects the final cost of the manufactured product and service. The company's overpriced electronic products and services are considered the innovators in the market as they are always a step ahead in the market from their competitors.
High Cost of Research and Development
Zinc is a type of metal that is one of the most commonly used metals in the world stands at the 4th position in the usage of making various products in the world. Zinc metal is widely used globally to manufacture various significant products such as alloys made up of brass and bronze, batteries, paints, and some rubber industry products (Tao et al. 2022). As zinc is also present in the human body in the form of minerals, it is used to manufacture various important medicines in the world to cure diseases like stomach disorders and certain deficiencies. The production and mining of zinc metal are conducted largely, mostly in China, Australia, and Peru. The essay aims to analyze the fluctuation in zinc prices from August 2016 to August 2021. This essay focuses on the concepts and theories of economics involved in the global fluctuation of the prices of zinc. The essay demonstrates the analysis of the provided graph that explains the global fluctuation in zinc prices. The discussion is about the reasons behind the fluctuation in zinc prices and identifying the economic concepts and theories related to this fluctuation (Kim et al. 2022). The main focus of this essay is to explain the provided graph about the fluctuation of prices of zinc metal and analyze the conditions under which the frequent changes in the prices are happening.
From the provided graph of the fluctuation of zinc prices, it is observed that from the year 2016 to the end of the year 2017, zinc prices rose from around $2000 per metric tonne to around $3500 (Rehman and Vo 2021). From the end of the year 2017, the price of zinc metal started to decline till the middle of the year 2020. It is absorbed from the graph that the highest price of zinc metal per metric tonne is $3500 at the end of 2017, and the lowest price of zinc metal is below $2000 in the year 2020 (Sugirtha et al. 2021). The graph shows that the prices of zinc metal that word below $2000 in 2020 are increasing consistently until the year 2021. In the year 2016, the prices of zinc metal are between 2000 dollars to $2500, And in the year 2021, the price is of zinc metal will be around $3000. In August 2016 and August 2021, the zinc metal prices have fluctuated a lot, but the fixed price of zinc metal in this period Increased from $2250 to $3000 (Rehman and Vo 2021). From August 2016 to August 2021, the fluctuation of prices in zinc metal globally is due to various factors discussed in this essay to understand the price changes and their impact on the economy. It is observed in the graph that the prices of zinc metal reduced during the fluctuation. One of the most significant reasons behind the reduction in the price of the zinc metal in economics is that the income of the individuals in the world is reducing. Due to this reason, the demand for zinc metal is also reducing globally. As mentioned earlier, zinc metal is heavily used as a raw material for making major iron and steel products in the world. Due to the fall in the income of the individuals and the demand for zinc and other products in the world, the production of zinc metal in the industries is falling (Ricardo et al. 2021). When the production of a product reduces, the demand of that product in the market also reduces that affects the price of that commodity, and lastly, the price reduces. The manufacturing or production of zinc metal worldwide requires energy sources from fossil fuels such as coal in a large amount. The use of fossil fuels to produce zinc metal releases carbon emissions into the environment, responsible for degrading the environmental resources worldwide. To reduce the carbon emissions in the environment due to zinc production, various kinds of innovations are taking place in the world that promotes renewable sources of energy such as solar power or hydropower. The reduction in zinc metal prices globally is also understood by the concept of electricity of demand in economics (Mensi, Vo and Kang 2022).
Closed System Used by Companies
As mentioned earlier, one of the reasons for the reduction in the prices of zinc metal globally is the fall in the income of individuals and the demand for zinc all over the world. When the income of individuals in the world falls down the income elasticity of demand remains positive because the demand for normal goods such as cars and products made up of zinc comes down. On the other hand, the demand for inferior goods will rise, resulting in the income loss of city demand as negative. So the main reason behind the reduction of prices in zinc metal globally is the fall in demand for normal goods such as cars, as they are made up of zinc. Another point of view is seen in the economics of price changes in zinc and the reduction of zinc price globally (Jimenez and Morales 2022). Due to the reduction in zinc prices, the consumers of zinc that are car producers and chemical producers of the world make huge profits. With the fall in the prices of zinc metal globally, the cost of production also comes down, which help the producer to increase its profit margin and increase its revenue. For example, if the producer of automobile vehicles or chemicals is producing 100 products at the price of $10 each before reducing the price of zinc (Pincheria et al. 2022). Then after the reduction in the prices of zinc, that same producer of car or chemical made up of zinc will be able to produce 100 products in less than $10. Moreover, in reducing the prices of zinc metal, the consumers worldwide also benefit as the consumers are required to pay less than what they were earlier paying for the same quantity of the same product. For example, if a consumer, before reducing the prices of zinc metal is buying 10 units of zinc made product for $500, then after the reduction, that consumer can buy those seem 10 units of zinc metal made product in less than $500 (Yadav and Banerjee 2022). This concept there an extra benefit is available to the consumer in reducing the prices of zinc is termed as consumer surplus in the market. In this situation where the price change is frequent in the graph of zinc metal prices fluctuation, the governments of respective countries create a buffer stock of zinc metal to control the prices worldwide. Creating a buffer stock by the government of a country is also used to control the economic conditions and reduce the burden of price change on the manufacturers and the consumers. On the other hand, the mentioned graph shows that the price of zinc metal rose during the year 2016 two 2018 and from 2020 to 2021 (Davies, Preez and Bessarabov 2022). In these years, the price of zinc metal fluctuated a lot, but major fluctuation was inclined towards the increment in the price of zinc metal.
High Level of Security Provided to Consumers
When the prices of zinc metal rise, it makes it difficult for the producers or manufacturers that built products related to zinc, such as cars or utensils. When the prices of zinc metal rise, it directly impacts the production cost of products made up of zinc. The rise in zinc price adds up to the production cost, vastly increasing the cost of producing zinc-related products. To solve this problem for the producers or manufacturers of zinc related products, the government of respective countries provides subsidies to all the producers to control the prices and reduce the burden of high prices on the consumers. The rise in zinc metal prices is observed in the graph is majorly due to the rise in the cost of usage of technology to produce zinc-related products. For example, a producer is manufacturing zinc metal automobiles with the help of non-renewable resources, and the cost of production is coming at an average of $2000 (Nayak, Jena and Mandre 2021). On the other hand, this same producer uses renewable energy sources; then, the production of automobile vehicles is coming out to be an average of $1500. This difference of $500 is due to the change in the technology used to produce zinc related products in the market (Rates 2020). The producers' difference in production cost of the same product directly impacts the revenue and the profit that the manufacturer is making by selling those products to the retailers and the consumers. Another significant reason for raising the prices of zinc metal shown in the graph is the change in the government policies and procedures to manufacture the products such as utensils or cars. When a producer produces zinc-related products in a factory and use non-renewable sources of energy such as coal, it releases many carbon emissions into the environment. These carbon emissions degrade the country's environmental conditions that affect the health of its citizens (Alam, Forhad and Sah 2022). To reduce or stop the emitting of carbon emissions into the environment, the government of respective countries introduces tax only production of zinc related products that are a burden on all the producers globally.
When an additional tax is added to the production cost, the price of zinc metal produced increases. For example, a producer manufactures automobile vehicles with the help of using non-renewable resources in the production cost of $2000 (Sperdouli et al. 2022). After adding the cost of tax that the government introduces to reduce carbon emissions into the environment, the producer can now produce that same automobile vehicle in the production cost of more than $2000. The increment in the production cost of manufacturing zinc related products from the producer results in the loss to the manufacturer and increases the finished product price for the consumers and the retailers. One more effect of the increase in the prices of zinc metal produced due to the government's text is that it reduces the demand for the product (Wang et al. 2021). When the production cost of zinc metal is rising, the demand contracts from the end of the consumer because of affordability in the market. For example, suppose a consumer plans to purchase an automobile vehicle with a fixed income. In that case, that consumer will change the decision to buy the vehicle because of the rising prices of zinc metal used to manufacture that vehicle. Some of the major zinc supplying countries in the world is Australia, South Korea, and Canada, which contributed the most in the usage of the zinc metal globally among consumers. The rise in zinc metal prices worldwide is also happening due to the break-in smooth flow of supply from major exporting countries. Countries like China and Europe cannot meet the huge demand for zinc-related products globally because of the power cut issues in the manufacturing of zinc that affects the performance of smelters in the factory (Yan et al. 2021). The power cut issues in the manufacturing process create malfunctions in the smelters that slow down the zinc manufacturing process and create a shortage in the supply of zinc.
Use of Advanced Technology in Products
The shortage of supply of zinc in the world increases the prices of zinc metal in the whole world. However, zinc production in the world is forecasted to be increased at higher levels and at a significant rate of 4.7% (Alam, Forhad and Sah 2022).The agencies are discovering various zinc mining areas in unexplored areas such as Bolivia, India, Mexico, Peru, South Africa and Kazakhstan. The discovery of zinc mining areas in the countries of Europe can increase the supply of zinc in the world and meet the demand of the consumers that frequently use zinc-related products such as cars or chemicals. The increase in the production of that is due to the discovery of new areas of mining in the world impact the changes in the prices of zinc in a positive manner. Due to the increase in the production and supply of zinc globally, zinc prices have come down. Zinc-related products such as automobiles have become more easily available and affordable to consumers worldwide. It is predicted that zinc production in the coming years will increase by 2.5% to around 14 mt per year, which can meet consumers' excessive demand for zinc (Zhang et al. 2022). It is observed from the graph that the prices of zinc are also fluctuating because of the usage of zinc related products such as automobiles, cosmetics (zinc oxide), paint (zinc sulfide), galvanizing material and alloys by the consumers in the world. The demand and supply of the mentioned zinc related products create changes in the prices of zinc as a raw material that impact the production cost of the finished product. The behavioral pattern of the consumers while using the zinc related products affect the price of the finished products in the market due to the change in the demand and supply of the products. It is seen from the graph that from the year 2018 to the year 2020, the reduction in the prices of zinc globally is also due to the measures taken by the People's Bank of China that is responsible for influencing the prices of zinc globally. The People's Bank of China takes measures to control zinc prices, resulting in the depression of the demand globally (Zuerl 2022). The depressed demand for zinc in the world reduced zinc prices as the prices fell rapidly all over the world.
From the above discussion, it is concluded that zinc prices fluctuate due to various economic factors that can impact the demand and supply of zinc-related products all over the world. In the discussion the factors that are responsible for the frequent fluctuation in the prices of zinc impact a lot in the global prices of other commodities in the world. The price change in the zinc also affected the demand and supply of zinc as a raw material that is used to manufacture various products such as automobiles, chemicals such as paint and other zinc related products. It is observed that the contraction of demand among the consumers of zinc related products is able to reduce the prices of zinc all over the world. Due to the contraction in the demand of zinc the producer also manufactures less amount of zinc in the market that creates the reduction in the price of zinc related products (Sun et al. 2022). The fluctuation in the prices of zinc is also influenced from the major institutions in the world such as People’s Bank of China. This bank is responsible for controlling the prices of zinc and it is based in China because China is the largest consumer of zinc in the world. In the discussion it is also seen that the producers make huge profits during the reduction in the prices of zinc as it helps to reduce the production cost of the finished product made up of zinc.
Premium Look of Products
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