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Using economic analysis, explain the possible causes of the increase in the sales of electronic goods such as mp3 players in recent years. [8]

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Introduction

Transfer-Encoding: chunked 1. Using economic analysis, explain the possible causes of the increase in the sales of electronic goods such as mp3 players in recent years. [8] The main causes of this increase in consumption of electronics is directly linked to the price mechanism and the changes that have occurred within the supply and the demand. Supply has increased as technological innovations have made production cheaper and more effective, while due to products offering more utility at lower prices, the demand has increased and was also extended. Moreover, due to the fact that electronics have become in essential part of modern life, demand has become far more inelastic as well. ...read more.

Middle

The cost of memory for example has decreased by a factor of a billion since the 70s, all the while it became smaller, faster and more reliable. Moreover, the creating of better products such as smartphones which offer far more features than previous electronic devices has also direct led to a shift in supply as the price ?per feature? has fallen. This has allowed suppliers to provide higher quality electronics at lower costs, in leading to an increase in supply, which leads to the equilibrium point shifting to the right, thus increasing the overall quantity consumed and leading to the recent increase in the sales of electronics. ...read more.

Conclusion

It is also likely that the recent increase in advertising has caused a shift in the tastes of consumers leading them to Thus the demand increases and becomes more inelastic, causing the demand curve to shift to the left and become more horizontal. Thus, due to technological advancements in the production process for electronics, and changes in the consumers? need and desire for electronics, both the demand and supply curves have increased leading to a shift to the left of the point where the consumers? willingness and ability to buy electronics equals the suppliers? incentive to supply to produce them, in turn showing the increase in sales of electronics seen in recent years. ...read more.

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