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The Price of the Typical MP3 Player (Such as the IPod)

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Essay

The price of the typical MP3 player (such as the iPod) has been going down in the past 10 years. What could explain this consistent drop in the price of MP3 players? Use the model for the long-run competitive firm to illustrate your answer (hint: you need two diagrams here: one showing the LAC for the typical firm, and another showing the long-run supply curve for the industry.)


Definitions:

Ancestral Character

a trait or characteristic that was present in the common ancestor of a group of species and may be retained or altered in its descendants.

Hair

A thin strand of keratin that grows from the skin of mammals.

Shared Homologous Structures

Anatomical features that are similar in different species due to shared ancestry, indicating evolutionary relationships.

Taxa

Groups of one or more populations of organisms classified together, representing categories used in biological taxonomy such as species, genus, or family.

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