Beruflich Dokumente
Kultur Dokumente
Submitted by:
James Viente Puentevella
Anna Marie Mabitad Revisado
Khristeen Eve Austria Debolgado
To:
Professor Rodelio F. Subade
Table of Contents
I. Abstract ........................................................................................................................................ 3
II. Introduction ................................................................................................................................ 4
A.
Background ...................................................................................................................... 4
B.
Objectives ......................................................................................................................... 5
C.
III.
IV.
A.
B.
Indifference Curve...........................................................................................................11
V.
Methodology ...................................................................................................................... 12
VI.
A.
B.
C.
VII.
A.
Conclusion...................................................................................................................... 25
B.
Recommendation ............................................................................................................ 26
VIII.
Appendices .................................................................................................................... 27
Appendix A.
Appendix B.
IX.
References .......................................................................................................................... 32
X. Acknowledgment ..................................................................................................................... 33
I. Abstract
The purpose of this study is to determine whether laptops and mobile devices are
substitutes or complements, and the factors affecting why they are so. The study looked into
various researches with conflicting conclusions some studies voting for complements and others
concluding that they are substitutes. The economic theories applied to this research are indifference
curves and budget lines, with respect to two variables: price and time. The methodology used is
convenience sampling on mostly junior college students from University of the Philippines
Visayas and University of San Agustin, applying the Contingent Valuation Model (CVM) to
measure how they value the two goods. The results of the study can be useful to analyze future
trends in the demand for both goods.
II. Introduction
A. Background
Various gadgets nowadays are essential into the advancing technology of the society.
Gadgets play a significant role in the common man's life and people have grown so used
to it that it becomes very difficult to think of daily life chores in the absence of gadgets
(Lee, 2011). Almost every entity and their different relating aspects embrace the use of
technology for effectiveness and efficiency. One observable manifestation of this is through
the utilization and incorporation of students of different kinds of gadgets into education.
Many schools use a mix of digital resources, touting potential benefits such as greater
ability to personalize, higher engagement among students, enhanced ability to keep content
updated and current, and greater interactivity and adaptiveness (Harold, 2016). The
numerous gadgets in todays market consisted the foundations of this paper to test whether
laptops and mobile devices are complements or substitutes.
Laptops and mobile devices, being the most accessible gadgets today, are
envisioned to be the most practical technological application to the educational activities
of students. Some of todays generation of digital natives are using technology in
collaborative and social ways that will revolutionize learning (Christodoulu, 2015). With
these emphasized reasons surrounding the numerous uses of laptops and mobile devices in
todays students, this study investigates the connection between the two goods whether
they are substitutes or complements. Substitutes mean that one good can be traded for
another good at a particular rate, while complements means that the two goods are used
together. Furthermore, this study makes use of the knowledge acquired through the study
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of the budget constraint line which is the limit of the consumption bundles that a consumer
can afford; the help of the indifference curve in explaining the satisfaction derived from
the usage of the aforementioned gadgets are also used in this study a curve that shows
consumption bundles that give the consumer the same level of satisfaction.
This study aims to assess whether laptops and mobile devices are indeed
complements or substitutes by conducting a statistical survey through a convenience
sampling technique of students in Iloilo City, the educational hub of the Western Visayan
region. Students from the University of San Agustin and University of the Philippines
Visayas were chosen as participants in the survey. The participants were asked of their
usual agenda in using gadgets, preferential usage, and their norm in the price and time
between laptops and mobile devices. This paper also examines why there is a significant
relationship and interchangeability in the usage of laptops and mobile devices. The paper
concludes with a discussion of the complementary or substitution implications by the usage
and price preference analyses between laptops and mobile devices.
B. Objectives
This study generally aims to determine whether laptops and mobile devices are
complements or substitutes. Specifically, it aims to:
1. Point out the complementary characteristics of laptops and mobile devices among
college students.
2. Determine the substitutable attributes of laptops and mobile devices.
3. Show the implications of the complementary and substitutable uses within the
budget constraint of each student with respect to price and time.
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III.
(complementarity), yet can be used separately since each are capable of productive utility
(substitutability). While opinions and studies usually incline to concluding that the two goods are
substitutes, some studies have empirical data that suggest otherwise. In this paper, the researchers
would want to investigate the nature of the preferences between the two goods. The following
literature from past studies are reviewed by the researchers to help them come up with the answer
of whether laptops and mobile devices are substitutes or complements.
According to the Ofcom International Market Report in 2015, UK mobile device users
spend nearly 32 hours browsing the internet in August 2015, while US mobile device users exceed
this number by a slight 23 minutes. On the other hand, UK use laptops at 33 hours per month,
while US is at 34 hours per month. The slight differences in the usage of the devices imply that
the two devices are comparable enough; this signifies their equal footing and thus justifies the
study that the researchers are currently conducting.
Monica Andersons study called the Technology Device Ownership in Pew Research
Center last October, 2015 revealed that today, 68% of US adults have a smartphone, up from 35%
in 2011, and mobile device ownership has edged up to 45% among adults. Smartphone ownership
is nearing the saturation point with some groups: 87% of those living in households earning
$75,000 and up annually. There is an opposite pattern with computer ownership. Today, 78% of
adults under 30 own a laptop or desktop computer, compared with 88% who did so in 2010. In
other words, a smartphones came to prominence several years ago, younger owners perhaps did
not feel as much of a need as their older peers to have other kinds of devices. This indicates that
not only are the nature of the two goods being studied is significant, but also the kind of people
who are being studied because this has a bearing on what devices they prefer to use. In the study,
we only focus on college students, which is the generation between the popularity of the laptop
and the rise of the mobile devices.
The Deloitte Global Mobile Consumer Survey Australian Cut revealed that Australians
mobile consumers have an almost equal accessibilities to either laptops or mobile devices, with
76% for smartphones and 71% for laptops in 2014, and 79% for smartphones and 77% for laptops
in 2015. In the same study, it was revealed that the demand for laptops has been declining in the
recent years, while the demand for mobile devices is going to the opposite direction. The two
demands have intersected in 2013, from then on the demand of the mobile exceeded that of the
laptops. These findings prove relevant to the study, for it is only three years since the intersection
point, meaning that at this point, the demand of both devices is still almost the same.
An article written by Charlie Wells for the Wall Street Journal entitled "Look, Mom, I'm
Writing a Term Paper on My Smartphone" strongly suggests that mobile devices can completely
replace laptops. People who write term papers usually do it on desktop/laptops, the researchers
included. According to the article, big companies such as Microsoft are adjusting to the shift of the
market from laptops to mobile devices through the launch of the Office 365 Education, the
productivity suite (with Word, Excel, PowerPoint, etc.) that is already usable on laptops and mobile
devices. However, it can be noted that there are still more PC or laptop users of the suite (1.2
billion) than mobile users (340 million). (GSMArena.com)
On the other hand, in a study conducted by Sam Groundar about the impact of mobile
devices in education, he hypothesized that there are potential advantages of using mobile devices
in education due to its simplicity and improved access compared to laptops/desktop computers.
With mobile devices, the real power is that it is scalable, so this lower cost technology will spread
beyond phones to tablets and existing computer networks in education as well as e-Books.
(Groundar, 2011) However, his research findings pointed out that, however promising mobile
devices are, these potentials are more easily realizable when complemented with the power of
laptops.
Furthermore, in the Pearson Student Mobile Device Survey: College Students (June 2015),
laptops are still the most commonly used mobile device for school work (87%) but mobile devices
are close with 64%. However, 42% of students use both laptops and mobile devices in a normal
day. The study was conducted online and has more than a thousand respondents. The study, all in
all, provides evidence about the existence of substitutability and comparability of the two goods
in the market.
IV.
Conceptual Framework
To prove the existence of the substitution or complementation between laptops and mobile
devices among students, in which gadgets are utilized the most, this paper primarily emphasizes
two significant economic principles that are fundamental to the concept of substitutes and
complements within goods. The concepts of budget constraint and indifference curve are enforced
in this study with price and time as consequent concepts.
A. Budget Constraint
The budget constraint is the first piece of the utility maximization framework, and
it describes all of the combinations of goods and services that the consumer can afford
(Beggs, 2016). The budget constraint is one of the factors that determine what you purchase
and do not purchase, and why demand curves slope down (Morey, 2016). With this concept
underlying the term budget constraint, it is theoretical that there are three factors that
govern budget constraints, that is, money, time, and the combination of money and time.
Money is posed as a factor of budget constraint, as it is the tender of payment to acquire
goods and services. The quantity of money may dictate the level of budget and obviously
constrain budget. Money can be equated to the level of income and level of price as the
two are inversely related in the transactions in the market with money used as the medium
or the manifestation for the fulfillment of the transaction. Time is also a factor of budget
constraint since time is a limited resource and thus proper allocation or preferential
allocation is essential in the usage of time.
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B. Indifference Curve
Indifference curves are a graphical representation of how much value an individual
receives from various combinations of consumption. We measure value through the catchall term utility, a concept for the value, well-being, satisfaction, benefit, etc. that someone
receives (Munson, 2014).
combinations of two goods which give a consumer equal utility. In other words, the
consumer would be indifferent to these different combinations (Pettinger, 2012).
Furthermore, an indifference curve is the locus of various points showing different
combinations of two goods providing equal utility to the consumer. Utility is then a device
to represent preferences rather than something from which preferences come.
(Geanakoplos, 1987) The main use of indifference curves is in the representation of
potentially observable demand patterns for individual consumers over commodity bundles
(Bhm, Volker; Haller, Hans, 1987). By theory, there are 4 qualities of an indifference curve
that may be useful in this study. First, indifference curves slope downward to the right.
Second, indifference curves are convex to the origin. Third, indifference curves do not
intersect each other. And lastly, a higher indifference curve represents a higher level of
satisfaction than a lower indifference curve.
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V.
Methodology
In order to realize the relationship between laptops and mobile devices, a random survey
was conducted on 60 undergraduate students from two universities in Iloilo City, namely
University of San Agustin and University of the Philippines Visayas. The survey was equally
shared between the two universities where the respondents from each university were randomly
selected based on convenience sampling. Convenience sampling is a type of non-probability
sampling method where people who are easy to reach are those being surveyed. The age of the
respondents ranged from 17 to 22 years old and the third year students were preferred over the
other years because this year level is considered as the busiest year in college. The respondents
were asked a series of questions that determine how they allocate their two classes of budget, time
and money. In answering the survey, the respondents were assumed to be active buyers with budget
constraints. First, each of the respondents were asked if he/she had a laptop and/or a tablet and
he/she was requested to indicate the brand of the gadget/s. Nine major questions with opinionated
follow-up questions on two major questions comprised the survey. Questions 1, 2, and 4 were
given for the purpose of determining the use of laptops and mobile devices and their weighs of
importance to the students. Question 9 was asked to find out how the respondents allocate their
time between the two indicated gadgets. Major Questions 3, 5, 6, 7, and 8 were geared to obtain
their allocation of money when buying the gadgets.
The survey included open-ended Contingent Valuation Method (CVM) where the
individual specifies his/her willingness to pay for each of the gadgets based on a limited budget
and his/her preference of the best price of each gadget given the entire budget needed. The mean
was used to compute a generalized answer for each open-ended quantitative question. This method
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involves getting the average data point by adding all gathered numerical data and dividing their
sum by their number. This method is the most convenient when the data are dispersed in a
determinably short range. For qualitative questions, the statistical mode determined the top
answers to the inquiries. One follow-up short essay question on Major Question number 4 was
asked to acquire the respondents reason for his/her appraisal of the two types of budget. This
survey served as the tool to find out the relationship between the two goodswhether they are
substitutes or complements.
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VI.
they originally had, and if it declined, its decline was insignificant. Some studies, however, reveal
that the steadily rising popularity of mobile devices had already outshone that of laptops. A few
studies, however, argue that the two devices have, as of now, almost equal value to consumers and
are complements instead of substitutes. The researchers, aiming to determine the actual state of
the two goods with respect to busy college students in Iloilo City, Philippines, also had mixed
results.
A. Respondent Demographics
SCHOOL The respondents were chosen from the
University of the Philippines Visayas (UPV)
with 33 of the total respondents and University
of San Agustin with 27 of the total respondents.
14
AGE The ages of the respondents range from 1722 years old, with ages 18 and 19
dominating the total respondent ages.
15
B. Graph Descriptions
HAVE A LAPTOP? Fifty-one of the
respondents
said
own
any.
LAPTOP BRANDS OWNERSHIP Acer laptops constitute the most laptops owned by
the respondents, followed by HP (Hewlett-Packard)
and then Lenovo laptops.
17
15
10
5
1
0
HP
Acer
Dell
16
Asus
Nextbook
Sony
HAVE A SMARTPHONE?
Fifty-eight of the respondents said they own a
smartphone, while only two stated that they dont
have any
17
4.03
4
2.71
2.46
Entertainment
Social Media
3
2
1
0
School Purposes
3.8
3.6
3.4
3.2
3.131
3.133
School Purposes
Entertainment
3
2.8
18
Social Media
C. Major Findings
Task/Preferred Devices
Laptop
Mobile Devices
Undecided
91.67%
0%
8.33%
45%
45%
10%
For entertainment
43.33%
45%
11.67%
Table 1 shows the preferred gadget of the respondents according to the task
given. For writing documents, the laptop is the more preferred, given that there are
no respondents choosing the mobile device. For surfing the internet, both goods
share the same preference level. The respondents do not mind switching between
the two devices in doing this task, implying substitutability. For entertainment, the
mobile device is slightly more preferred over the laptop, but the difference is
insignificant for it to be considered superior.
0%
10%
20%
30%
Laptop
40%
50%
Mobile Device
60%
70%
80%
90%
100%
Figure 2 shows that majority of the respondents treat the two goods under
speculation as equally important, comprising 76.67% of the total number of
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Why? The most common answer derived from the survey is that laptops
and mobile devices complement each others functions laptops are more
convenient for academic purposes, while mobile devices are valued for its
portability. The respondents are reluctant to give up any of the two goods.
20
Laptop
Apple
Asus
BRAND
Lenovo
Acer
Samsung
HP
Others
0
10
15
20
25
21
22
33%
50%
17%
Figure 5 shows that half of the respondents will tend to increase their
consumption of both goods if the price of the laptop falls. This indicates a
complementary relationship between laptops and mobile devices when it comes
to allocating their budget which is money.
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Figure 6 graphs the tendency of the respondents when the price of laptop falls. The
answers suggest that both goods are complements as the fall in price of one of them induces
an upgrade in the purchase of both goods. The new optimum is now at the better versions
of both gadgets.
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usage. Meanwhile, mobile devices rank first in social media usage and last in school
purposes. Both are at par in entertainment usage. This indeed shows the substitution effect
with respect to usage or time.
Finally, the researchers have concluded into a simple inference that laptops and
mobile devices are complements with respect to price and substitutes with respect to usage
or time.
B. Recommendation
This research has only investigated the substitutable and complementary
relationships between laptops and mobile devices. It has not assessed the supply and
elasticity of both goods in the market. The researchers recommend that these factors be
assessed. Furthermore, this research is only at a micro level and may not represent the
national market as results can vary among different locations and respondents. It is
recommended that this research be further studied among people of different income
brackets, educational attainment and occupations in various settings to validate the findings.
Also, the researchers suggest that a more reliable probability sampling of respondents be
considered when selecting the respondents and interpreting the results for better coherence.
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VIII. Appendices
Appendix A. Survey Questionnaires
Good Day! We are BS Accountancy students from the University of the Philippines Visayas and
we are currently studying whether laptops and mobile devices are substitutes or complements in
our Microeconomics course. Substitutes mean that you are willing to trade one for the other, while
complements mean that you prefer having both as they are more useful when used together. Mobile
devices can mean tablets/smartphones. Answers should be based on your own preference. There
are no right or wrong answers.
Respondents Name (Optional):
Sex:
School:
Age:
Course:
Hometown:
Year Level:
Do you have a laptop? (Underline) Yes | No
Do You have a smartphone/tablet? (Underline) Yes | No
Brand of Laptop:
Brand of Mobile Device:
Rank your average usage on a per day basis with: (1 highest, 3 lowest) (Please indicate
estimated hours of use)
Laptop
Mobile Device
__ School Purposes
__ School Purposes
Hours of use: __
__ Entertainment
Hours of use: __
__Social Media
Hours of use: __
Hours of use: __
__ Entertainment
Hours of use: __
__ Social Media
Hours of use: __
27
___
Mobile Devices?
___
For entertainment?
Suppose you have budget to use, if the price of laptop falls, (Check your answer)
__ I will buy a more sophisticated laptop
__ I will buy a mobile device with my saved money
__ A better laptop and a better mobile device
Which do you think is more important (Check your answer and indicate why)
__ Laptop
__ Mobile Device
__ Both are important
Why? ____________________________________
__________
Given a budget of Php 40,000, how much are you willing to allocate your budget to
A laptop?
__________
28
29
55
Mobile Devices
Cannot Decide
27
Mobile Devices
27
Cannot Decide
For entertainment?
Laptop
26
Mobile Devices
27
Cannot Decide
Mobile Devices
47
Cannot Decide
Suppose you have budget to use, if the price of laptop falls, (Check your answer)
I will buy a more sophisticated laptop
20
10
30
Which do you think is more important (Check your answer and indicate why)
Laptop
Mobile Device
9
30
46
34
19
12
31
Equal usage
17
31
IX.
References
Goundar, 2011, Using Mobile Devices in Education, from Proceedings of SIG GlobDev Fourth
Annual Workshop, Shanghai, China - December 3, 2011
2015 Pearson Student Mobile Device Survey College
Available at: http://www.pearsoned.com/wp-content/uploads/2015-Pearson-StudentMobile-Device-Survey-College.pdf
Monica Anderson. Technology Device Ownership: 2015. Pew Research Center, October, 2015,
Available at: http://www.pewinternet.org/2015/10/29/technology-device-ownership-2015
Charlie Wells. Look, Mom, Im Writing a Term Paper on My Smartphone
Available at: www.wsj.com/articles/look-mom-im-writing-a-term-paper-on-mysmartphone-1455729046
Ofcom International Market Report: 2015
Available at: https://www.ofcom.org.uk/about-ofcom/latest/media/mediareleases/2015/cmr-uk-2015
Deloitte Global Mobile Consumer Survey Australian Cut
Available at: http://landing.deloitte.com.au/rs/761-IBL-328/images/deloitte-au-tmtmobile-consumer-survey-2015-291015.pdf
Gregory Mankiw, Principles of Microeconomics 4th Edition
32
X. Acknowledgment
We, the researchers, would like to extend our gratitude and appreciation to the following
people who outstretched their extra effort and time in helping us proceed with the success of this
study:
To Ms. Alexandra Sabido, a 3rd year BMLS student from the University of San Agustin
for helping us conduct a survey in the said University;
To Ms. Aila Kate Suminod, a 3rd year Marketing Student at the University of the
Philippines Visayas for helping us finalize an accurate tally of results from the survey;
To the team of Ms. Thea Culaba, currently a 4th year Marketing Student at the Univeristy
of the Philippines Visayas, for making their term paper in Economics available for format
adaptation in this Paper;
And finally to the merciful God Almighty for the constant guidance. To Him be the Glory.
33