Some more microeconomics

[Schuba]

Hey guys if you're just here to troll please do not post because I actually need help solving this.

Okay, I have a prompt for a paper and it involves solving an economics problem.
I just need someone to help point me in the right direction to answering what they're asking.

The problem is: "The average price of a high-definition plasma or LCD television fell between 2001 and 2006, from more than $8,000 to about $1,500. During that period, Sharpe, Matsushita Electrical Industrial, and Samsung all began producing plasma or LCD televisions.

Explain in terms of supply and demand how the price of plasma or LCD televisions fell so sharply over this time period. (Hint: start with the original equilibrium price ($8,000) and then move to the new equilibrium price ($1,500))"

I'd appreciate help very much.

[[MPGH]arunforce]

this.

[img]https://stephansmithf*****m/wp-content/uploads/2011/01/Supply-and-Demand-Graph.png[/img]

[Scotia]

You suck at economics.

[Schuba]

this.

[img]https://stephansmithf*****m/wp-content/uploads/2011/01/Supply-and-Demand-Graph.png[/img]

So in 2001 the equilibrium price of Plasma and LCD televisions was $8000 because the supply was high and the demand was low. In 2006 the price dropped to $1500 because the demand was high and the supply was low?

Law of Supply: At higher prices, a larger quantity will generally be supplied than at lower prices, all other things held constant. At lower prices, a smaller quantity will generally be supplied than at higher prices, all other things held constant.
Law of Demand: When the price of a good goes up, people buy less of it, other things being equal. When the price of a good goes down, people buy more of it, other things being equal.

[Assistive]

this.

[IMG]https://stephansmithf*****m/wp-content/uploads/2011/01/Supply-and-Demand-Graph.png[/IMG]

He would have to explain that though. Which that is pretty easy to explain.


With the equilibrium price being $8000, we can say that was when the TV's were first being marketed. When items are first introduced into the market, their value is usually fairly high. Over time more and more of the item is created and sold and the product is no longer considered "new". With this being said, the demand will indefinitely fall. When you have a decrease in demand, you will have an increase in TV's since they are no longer being sold at such a high quantity. When this happens, the price will always drop to rid of the TV's that are no longer being sold as often.

[Schuba]

You suck at economics.

I already knew this information.

[Assistive]

I already knew this information.

You just have to pay attention. If you miss a lesson then you are pretty much fucked.

[Schuba]

You just have to pay attention. If you miss a lesson then you are pretty much fucked.

The reason I'm trying to get some extra help is because every economical mistake is 10 points.
Edit; Oh and it's an online course, so I have to teach myself everything.

[Assistive]

The reason I'm trying to get some extra help is because every economical mistake is 10 points.
Edit; Oh and it's an online course, so I have to teach myself everything.

Not something you should do online.
tbh I have nothing good to say about online schooling. Its not a productive way to learn.

[Schuba]

Not something you should do online.
tbh I have nothing good to say about online schooling. Its not a productive way to learn.

I completely agree with you! It sucks. They closed my original Microeconomics 201 class and the only other option was an online course that had 3 seats open or I couldn't take the course and I needed it.

[Auxilium]

Simple. An increase in supply (i.e. more manufacturers) will cause a right shift in the supply curve, which consequently will move the equilibrium point.

If you wanted to take a macro approach, you could explain that a decrease in aggregate demand brought down the price level, since there may have been demand-pull inflation in the economy. contractionary fiscal policy and stuff

[Auxilium]

Secondly, if you have to explain why supply shifted, these are the determinants:

CENTTR
C-Cost of production (if it costs more, they can produce less, vice versa)
E-Expectations of future events (if there is a war arising, supply for military stuff will increase, or something like that)
N-Number of firms in an industry (more firms = more products, vice versa)
T-Technological advances (if it becomes easier to make something due to technological advance, more can be made)
T-Taxes or subsidies (more taxes will cause businesses to make less to keep a profit, subsidies will allow them to make more for the same profit)
R-Related goods' prices (hard to explain)

In this case it would be N and T, number of firms and technological advances

[[MPGH]arunforce]

So in 2001 the equilibrium price of Plasma and LCD televisions was $8000 because the supply was high and the demand was low. In 2006 the price dropped to $1500 because the demand was high and the supply was low?

Law of Supply: At higher prices, a larger quantity will generally be supplied than at lower prices, all other things held constant. At lower prices, a smaller quantity will generally be supplied than at higher prices, all other things held constant.
Law of Demand: When the price of a good goes up, people buy less of it, other things being equal. When the price of a good goes down, people buy more of it, other things being equal.

No. You can't traverse both curves, one has to move. Demand and supply both increased. The supply curve shifted to the right, as more companies entered the market. But that's a macroeconomics viewpoint.



The microeconomics answer is different. It's been a while since I took micro economics, don't know if this would qualify for an answer, but from an economics perspective: the sunk cost of the machinery needed to manufacture the televisions has (assumedly) been paid off (loans, principle, interest), so the price per television can be lowered. More companies entering the market and more demand, combined with newer and cheaper manufacturing and technological advances, led to a lower price point per television set than before. That's basically how the tech market works.

[Niku ・(￣∀￣)・]

I've learned Economic in High School. its still almost the same .
but here : 2001=Supply low ,demands high.
2008=Supply high , demands low .
Just as another reason which is another products that are far more cheaper and more reliable also technology are more advance .People wanted to try a new product . future .

[Schuba]

No. You can't traverse both curves, one has to move. Demand and supply both increased. The supply curve shifted to the right, as more companies entered the market. But that's a macroeconomics viewpoint.



The microeconomics answer is different. It's been a while since I took micro economics, don't know if this would qualify for an answer, but from an economics perspective: the sunk cost of the machinery needed to manufacture the televisions has (assumedly) been paid off (loans, principle, interest), so the price per television can be lowered. More companies entering the market and more demand, combined with newer and cheaper manufacturing and technological advances, led to a lower price point per television set than before. That's basically how the tech market works.

Okay thanks dude, I really appreciate the help. I just don't have a good grade in this class and this could either help me tremendously or sink me to the very bottom.