Personal Computers Are Becoming Less Expensive as New Technology Reduces

question 134

Essay

Personal computers are becoming less expensive as new technology reduces the cost of production. In a supply and demand model, explain the effects of the technological innovations and their effect on the quantity of computers.

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Definitions:

Price Level

The calculated average price across the broad spectrum of goods and services in an economy.

Investment Spending

Expenditure on capital goods used to produce other goods and services in the future.

Consumption Function

An economic formula representing the relationship between total consumption and gross national income.

Marginal Propensity to Save

The fraction of an increase in income that is saved by an individual or population, representing how savings change with changes in disposable income.