In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?
A)Intense competition in the calculator industry caused the supply curve for calculators to shift to the left, depressing the price.
B)An increase in the demand for calculators led to the price drop.
C)An improvement in technology caused the supply of calculators to increase, depressing their price.
D)As the population grew, fewer expensive calculators were needed, causing prices to fall.

Question

In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?
A)​Intense competition in the calculator industry caused the supply curve for calculators to shift to the left, depressing the price.
B)​An increase in the demand for calculators led to the price drop.
C)​An improvement in technology caused the supply of calculators to increase, depressing their price.
D)​As the population grew, fewer expensive calculators were needed, causing prices to fall.

Quizplus · Accepted Answer

An improvement in technology caused the supply of calculators to increase, depressing their price. With the advancement of technology, the production process became more efficient, and the cost of production reduced significantly. The lower cost of production allowed manufacturers to produce calculators at a lower price, which led to a significant decrease in the price of calculators from 1975 ($50) to 1990 ($10) despite an increase in demand.

In 1975 a Pocket Calculator Cost More Than $50; in 1990