Question

There is a market of computer i.e. there is some demand and supply of computer. Shown in a diagram the effect on the demand and supply curve, the equilibrium price and the equilibrium quantity if “THE SALARIES OF ELECTRONIC TECHNICIAN GO UP”.

Answer 1

Answer:

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Explanation:

For this, you need to take into consideration, the non-price determinants of the supply curve. One of them being advancements in technology. I understand your point when you say that as per the law of supply, as the supply increases, the prices should rise. However, in the case of computers as the supply has increased, the prices have fallen.

But, you see, this technological advancements, the non-price determinant of supply curve, plays a role in shifting the supply curve either inwards (to the left) or outwards (to the right).

What has happened in the case of computers is this:

Thanks to the advancements in technology, the manufacturers are now able to manufacture the computers at a lower cost and with greater magnitude of production. Thus, compared to the earlier scenarios, the manufacturers could supply a greater quantity of the computers and that too, at a lower price since their cost of production has reduced due to the technology.

This can explain the entire scenario.