Why have electronic devices like the iPod Nano gotten cheaper recently?

2 Answers | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

To economists, a reduction in price must come either from a decline in demand or an increase in supply.  Both of these are involved in the decline in price, depending on the device.

For some devices, demand is going down as the device becomes less "cutting-edge."  If new versions of the device are coming out, older versions will experience drops in demand and their prices will fall.

For other devices, supply has increased.  This is often due to improvements in the manufacturing process and to economies of scale.  In other words, as the companies have learned more about making these devices, they have been able to reduce their costs.  This results in an increase in supply and lower prices.

We’ve answered 317,872 questions. We can answer yours, too.

Ask a question