In the mid-1970s no one had a personal computer at home. Today many people do. Using demand and supply curves show the market for personal computers in the mid 1970s and today. Explain the...

In the mid-1970s no one had a personal computer at home. Today many people do. Using demand and supply curves show the market for personal computers in the mid 1970s and today. Explain the difference between then and now.

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Ashley Kannan | Middle School Teacher | (Level 3) Distinguished Educator

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In being able to establish the intersection and interplay of supply and demand curves in the market for computers, there must be some basic definition and application of terms.  The first would be to understand the elements that govern the law of demand.  There is an inverse relationship between the amount that is demanded of a good and its price.  The higher the price of a product, the less demand is generated.  This is definitely present in the computing market of the 1970s.  For a large part of the 1970s, the demand for a computer on a personal level was not readily accepted by the public.

Part of this reality resided in the notion of computers, themselves.  Computers in the 1960s and 1970s were associated with realms that existed outside of the individual.  As a result, the prices attached to computers were exorbitant.  The costs associated with purchasing and maintaining a computer were immediately associated with multinational organizations, governmental agencies, and domains that were far from the personal realm.  With costs ranging from tens of thousands of dollars for a computer, the idea of demand and price being inversely related is evident.  The higher price tag associated with a computer led to a decrease in demand.  This would be shown in a supply/ demand curve with demand starkly decreasing.  While a supply curve is evident, it is small and restrictive, residing in the higher end of a price scale.  In this supply/ demand curve for computers in the 1970s, one is able to construct how the supply of computers resided for organizations and individuals who were specialized and highly wealthy with a low trajectory for demand.

Indeed, this supply and demand curve dramatically changes with the advances made in the personal computing field in the mid- 1970s and beyond. Innovations in microprocessing units, revolutions in hardware design and cost, along with actual personalized models such as the Altair 8800 transformed the capacity of computers.  These developments helped to move the supply and demand curve for the personal computer.  The change in income and cost helped to move the demand part of the curve.  As a result, the supply element begins to alter, as well.  The result is a graph that shows a changing marketplace for the personal computer.  The supply/ demand curve for this reality would show another plotting for demand, this one higher than the original with the shift in cost along with a strong uptick in supply, shown by a new plotting that is lower and cutting across more of the graph field. This different direction of supply is to reflect how the quantity of personal computers were being appropriated by more people due to a decrease in cost and thus a wider growth in demand.  This shift reflects how the marketplace was more reflective of individuals who saw that a personal computer could be utilized by them and no longer was restricted to a specialized domain. Its uses became more applicable to individual lives and thus more personalized. This generalization of the personal computer marketplace would be shown with a wider supply curve meeting a higher demand point for as prices dropped, demand increased. Prices decreased and thus demand increased, ensuring that quantities increased.  The point in which both intersect on the supply/ demand curve show this changing in the marketplace, an intersection that was much more specialized and farther off the graph field in the 1970s.  Such a condition is reflective of the marketplace today for personal computers. It helps to explain how there was a fundamental difference in the personal computing market between the 1970s and now.

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