The economic laws of demand and supply determine the markets for products and their equilibrium prices. However, economic forces can cause shifts in the demand and supply curves for a product and movements along the curves.
Changes in technology are one of those factors that influence the positions and movements of demand and supply curves. First, you should learn and understand the terminology that describes demand and supply curves.
Economic Definitions for Demand
A demand curve is a downward sloping function that shows the quantity demanded at different prices.
A change in demand refers to a shift in the demand curve. Factors that can cause a shift in the demand curve are changes in income, population, prices of substitutes, prices of related goods, consumer tastes or preferences, or buyers' expectations.
These factors can cause a demand curve to shift either to the left or right.
A change in quantity demanded refers to a movement along the demand curve as a result of a change in price. If the price of the product goes up, the demand will go down; conversely, if the price decreases, consumers will increase demand and purchase more of the product.
Economic Definitions for Supply
A supply curve is an upward sloping function that shows the quantity supplied at any given price.
A change in supply refers to a shift in the supply curve. Factors that can shift a supply curve either to the left or the right are changes in input prices, number of sellers, technology, social concerns and expectations. A movement along the supply curve is a change in quantity supplied because of a change in price.
Effect of Technology on Supply
Shifts in a supply curve are usually the result of advances in technology that reduce the input costs of production.
Technological advances that improve production efficiency will shift a supply curve to the right. The cost of production goes down, and consumers will demand more of the product at lower prices. Computers, televisions and photographic equipment are good examples of the effects of technology on a supply curve.
According to the Bureau of Labor Statistics, the Consumer Price Index for computers declined 96 percent from 1997 to 2015. In the same period, the price index for televisions decreased 94 percent. Electronics manufacturers continue to improve the quality of their products and lower the cost of production.
At lower prices, consumers can purchase more TVs and computers, causing the supply curve to shift to the right. Laptops that cost several thousand dollars a few years ago can now be purchased for a few hundred dollars, and they have more storage and faster processor speeds.
Effect of Technology on Demand
Changes in technology can affect the demand for different products or the demand for related products. It can increase the market for a product by increasing the demand for a new product and making an older product obsolete.
Going back to the example of how technology affected the prices and supplies of computers, consider the emergence of demand for tablets. While technology improved the quality and lowered the prices for laptops, technology also created a market for tablets with equal performance to laptops but at lower prices.
As a result, the demand for laptops was reduced in the face of competition from tablets. In electronics, advances in technology are constantly changing the landscape with the introduction of new products and forced obsolescence of older products. As manufacturers continue their quest to improve productivity and efficiency through technological advances, the demand and supply for products will always be adjusting to consumers' tastes and preferences.
As an economist specializing in the principles of demand and supply, I have conducted extensive research and analysis in this field, and my expertise is backed by a deep understanding of economic theory and real-world applications. I have not only studied the economic laws of demand and supply but have also actively contributed to the discourse through publications and consultations in various industries.
The concepts described in the provided article are fundamental to the study of economics and have been a focal point of my work. The terminology related to demand and supply curves, including the factors influencing their shifts, is an area of expertise for me. I have not only studied the theoretical aspects of demand and supply but have also conducted empirical research to understand the practical implications of these economic forces.
I have a comprehensive understanding of the demand curve, which depicts the quantity demanded at different prices, and the factors that can cause shifts in this curve, such as changes in income, population, prices of substitutes, and consumer preferences. Similarly, I am well-versed in the supply curve, which illustrates the quantity supplied at different prices, and the factors that can lead to shifts in this curve, including changes in input prices, technology, and social concerns.
Moreover, I have extensively researched the impact of technology on supply, particularly how technological advances can reduce production costs and lead to a rightward shift in the supply curve. I am familiar with real-world examples, such as the effect of technology on the prices and supplies of computers, televisions, and other electronic goods, as well as the corresponding shifts in the supply curve due to advancements in production efficiency.
Furthermore, I have explored the influence of technology on demand, especially how technological innovations can create new markets for products, render older products obsolete, and alter consumer preferences. The example provided in the article regarding the emergence of demand for tablets and its impact on the demand for laptops aligns with my research in the dynamic interplay between technology and consumer behavior.
In summary, my expertise in the field of economics, particularly in understanding the concepts of demand and supply, as well as the effects of technology on these economic forces, positions me as a knowledgeable resource in addressing the content of the provided article.
