i) Explain intuitively why Apple’s revenue has increased after the average sale price increase,

| December 7, 2018

i) Explain intuitively why Apple’s revenue has increased after the average sale price increase, even though the quantity sold fell. (2 marks)
ii) Given that the average sale price of an iPhone increased from $694 in Q1 2017 to $796 in Q1 2018 (Gartenberg, 2018), calculate the price elasticity of demand for Apple iPhones. (1 Mark)
iii) Draw a representative demand curve for Apple iPhones, which is consistent with your answer to part ii above. Label each relevant point on your diagram and give it a heading. Explain your diagram fully, including discussion (linked to the points indicated in your diagram) about price, quantity and revenue, and how the diagram illustrates/fits in with your answer to part i. Note, only one demand curve is required – treat iPhones as one good, rather than looking separately at iPhone X and iPhone 8, using the average sale price

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