Benji (Hao Hua) posted an interesting article regarding the iPhone’s performance in China. His post stated that Apple’s market share in China is 4.8% and dropping. This is because of its hefty price at $757 while its Chinese competitor, Xiaomi, sells its highest end phone at $285. Firms, like Apple, are profit maximizing companies that aim to increase profitability  and microeconomics is essential in finding the quantity that maximizes profitability. We can see that the iPhone is an elastic product as there are many competitors with Xiaomi and other famous smartphone brands like Samsung and HTC. An elastic product suggests that it is price sensitive and an adjustment in price would greatly affect the quantity demanded. As a result, Apple may increase revenue if it slightly reduced its price. Ultimately, this potentially could increase profitability as reducing the price of the iPhone will allow Apple to maximize revenue. However, Benji mentioned how the Chinese valued the prestige the iPhone had against its competitors. This suggests that the iPhone may be an inferior good suggesting a reduction in price would reduce the quantity demanded as it does not give the same marginal utility value as it loses it’s ‘prestige’ factor. We can see that Apple’s business decisions greatly incorporates microeconomics in calculating