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Why Price of Laptop Computers Fell - Case Study Example

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In the paper “Why Price of Laptop Computers Fell” the author discusses various factors that have contributed to the decline of laptop prices in the last two years. Under the most basic economic theory, demand and supply of a product determine its price…
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Why Price of Laptop Computers Fell
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Download file to see previous pages The price at this equilibrium was P0 and the Number of Laptops was Q0.
As the demand fell due to the reasons discussed below, the demand curve shifted to left, D1. If the prices were to stay at P0, the quantity demanded, Qx would have been much lower than quantity supplied, Q0. In order to increase consumer demand, firms would have to reduce the laptop prices until it reaches the new equilibrium level, P1. At this point, the market is in equilibrium. The reduction in price increases the demand and the new quantity of laptops in the market would be Q1.
The most basic thing to consider in determining the price of a laptop is the technology used in it (Neidalos, 2010). Technology advances at a very rapid pace in today’s world. The reason for that is our increasing dependence on technology, which makes companies invest more and more in research and development, bring new and innovative technologies to market. Therefore, it takes very little time for technology to become old when new lines of processors, display monitors, software, etc. come to market sooner than we expect.
Naturally, because this shifts the demand to newer, more efficient technological solutions, the only smart thing for laptop manufacturers to do would be to lower their prices to sell off the older technology. (Neidalos, 2010)
This increasing need for innovation in technology has created fierce competition in the market. There are numerous laptop manufacturers to choose from, today. For instance, on any given budget, a consumer has options to choose from many more brands as compared to a few years ago. Also, every brand has many more variations in its product line as well. This ever-increasing supply of laptops causes firms to compete on minimal profit margins by lowering their prices.
Moreover, consumers today, have many alternatives to choose from.  ...Download file to see next pages Read More
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Why Price of Laptop Computers Fell Case Study Example | Topics and Well Written Essays - 1500 Words.
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