Economics for Today 9th Edition by Irvin Tucker

Exercise 41

PC PRICES: HOW LOW CAN THEY GO?
Applicable Concept: nonprice determinants of demand and supply
Radio was in existence for 38 years before 50 million people tuned in. Television took 13 years to reach that benchmark. Sixteen years after the first PC kit was introduced, 50 million people were using one. Once available to the public, the Internet crossed that line in four years. Before 1999, there were no blogs, and now there are millions. Today over 80 percent of U.S. households have a computer. Following are quotes from articles that illustrate changes in supply and demand for computers over time.
An Associated Press article reported in 1998:
Personal computers, which tumbled below the $1,000-price barrier just 18 months ago, now are breaking through the $400 price mark-putting them within reach of the average U.S. family. The plunge in PC prices reflects declining wholesale prices for computer parts, such as microprocessors, memory chips, and hard drives. "We've seen a massive transformation in the PC business," said Andrew Peck, an analyst with Cowen Co., based in Boston.
In 2001, an article in The New York Times described a computer price war:
We reached a situation where the market was saturated in 2000. People who needed computers had them. Vendors are living on sales of replacements, at least in the United States. But that doesn't give you the kind of growth these companies were used to. In the past, most price cuts came from falling prices for processors and other components. In addition, manufacturers have been narrowing profit margins for the last couple years. But when demand dried up last fall, the more aggressive manufacturers decided to try to gain market share by cutting prices to the bone. This is an all-out battle for market share.
In 2014, analysts in USA Today observed the following:
The PC industry just had its best quarter since 2012. Tablet sales are in a tailspin … economic conditions and consumer confidence underscored the surge. …
Finally, Wikipedia reports that over time changes in supply and demand have continued to reduce PC prices. In 1982, for example, Dell offered a $3,000 PC. By 1998, the average selling price was below $1,000. Today, computers selling for less than $300 outperform computers from only a few years previously.
Identify changes in quantity demanded, changes in demand, changes in quantity supplied, or changes in supply described in the article. For any change in demand or supply, also identify the nonprice determinant causing the change.