ECO 1000 Rasmussen University Principles of Microeconomics Question

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Economics

ECO 1000

Rasmussen University

ECO

Description

You are a junior executive of a new cellular phone carrier called Technologies of the Future (TOF) that competes in the same market as Verizon Wireless, AT&T, and T-Mobile. You are asked to write a professional document that discusses the concepts below.

  • How would economic fluctuations affect the sale of smartphones?
  • Please define the four phases of the business cycle that affect economic fluctuations.
  • How would unemployment levels affect the sale of smartphones?
  • How would the sale of smartphones be affected if the labor force participation rate decreased?
  • Please define the labor force participation rate and provide the current labor force participation rate in the United States.
  • How would inflation and less consumer purchasing power affect the sale of smartphones?

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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.

1

Principles of Microeconomics

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Principles of Microeconomics
In the current days, mobile phones are among the most used communication gadgets.
Cellular phones require network carriers to communicate, and due to this, there are many cellular
phone carriers in the industry. Like other businesses, cellular phone carriers exist in the same
economy as other companies hence affected by economic changes. Economic fluctuations are
common in every country, but their effects differ based on the state of the economy (Cameron,
2021). Economic fluctuation is the increase and decrease of economic activity, and it is measured
by real GDP (Guerron et al., 2018). When the real GDP increases, the economy performs well,
while during low real GDP, the economy experiences various problems. Due to this, every
cellular phone carrier should be prepared to deal with economic fluctuations in the future.
Economic fluctuations have different effects on the sale of smartphones. The type and
nature of economic fluctuations determine if the effects will be positive or adverse. Expansion
and recession of the economy have different impacts on the sale of smartphones. One of the
effects of sales of smartphones due to economic fluctuations is the increase of the sale. During
expansion, every part of the economy performs as planned, leading to increased real GDP
(Guerron et al., 2018). As a result, many jobs are created, aggregate demand increases, supply
increases, and consumer disposable income increases. An increase in demand requires increased
supply, and cellular phone carriers will make many sales (Cameron, 2021). Economic expansion
can also increase the revenue from the sale of smartphones because demand will be higher than
the supply hence, increasing smartphone prices. Despite the increased price of smartphones,
consumers will be willing to buy because they have much disposable income.

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On the other hand, the sale of smartphones reduces during an economic recession. During
a recession, the aggregate demand drops because consumers have less money in their pockets
and banks (Cameron, 2021). Because it is economic hardship, consumers will prioritize essential
goods and services such as food, housing, and medicine hence lowering the demand for
smartphones. Political instability is a common economic fluctuation that can also affect the sale
of smartphones. Civil wars, corruption, and terrorism can lower the sale of smartpho...


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