Within weeks after Samsung launched the Galaxy Note 7 smartp

Within weeks after Samsung launched the Galaxy Note 7 smartphone in August 2016 the phone started erupting into smoke and Flames how did this affect the demand for Note 7s? what determinants of demand changed

Solution

Demand for note 7s fell after the phone\'s eruption. The determinants that led to decrease in demand are the following-

i) luxury to inferior good- the eruptions increased the risk of health which made it an inferior good. Note 7s was for higher income group and as it became inferior, its demand fell.

ii) change in preferences- when the good become riskier, people preferred not to have it. This is a change in preferences.