Tuesday, July 6, 2010

I-Phone4 and the cost of its component parts---Very nice breakdown!!

A very nice, if incomplete, breakdown of the component costs for the I-Phone4, and where those parts come from.  It is quite amazing how the parts make their way around the world and into a finished product.  It is hard to say how much Apple makes in profit from each phone because many other costs (fixed and variable), in addition to the ones shown here, are not included.  However, it is instructive to look at the various component costs because those do include fixed and variable costs (accounting costs which are JUST explicit costs of production).  The article contains many fascinating Microeconomics concepts, but the main point is that labor, which is the largest variable cost of producing MOST goods, is increasing at the assembly point of the world-wide production chain. This visual will be helpful in AP Microeconomics when we discuss cost of producing/normal vs. economic profit, international trade, etc. 

From NYTIMES: Supply Chain for iPhone Highlight Costs in China

A breakdown of the same numbers and a different take on the topic are contained in this pie chart from Carpe Diem 

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