I think that the increase in supply is more due to the fact that there is an increasing number of entrants into the blu-ray hardware business. This not only increases the number of machines on the shelves, but also forces competition between companies to drop prices. Think in these terms, in a monopoly, the company can essentially ask as much as they want; as we move into an oligopoly, the price is forced lower as a result of the market competition, as more and more companies enter the market the price is forced to a point when no profit can be earned... do you want me to find the graphs that prove this point?
No, that's okay because that is a well known point that I won't debate because it's true. Like you said, in a monopoly it's cut and dry since it's just a dual market (consumer/company or demand/supply). It's easier to understand that as demand increases supply increases and price increases.
Now once a second supplier enters the game things change a bit. The second supplier can undercut the bigger company by shaving off some profit on their end, but they still need to make a profit.
Let's say Apple sells computers for $500, and people by them by the droves, and it costs Apple $200 to make each one, $300 profit. If no one enters the market they can raise prices, and people will still buy them. Dell comes along and notes that, while Apple sells their machines for $500 they can sell them for a little less, like $450. They could go down to $250 but why would they? HP comes along and undercuts Dell to $400, same thing, they could go to $250 or even $205 but why? Now, by this time demand has come down because there are other vendors supplying the machines, not just Apple with their limited supply.
Now the part that some are missing.... Apple selling their at $500 has much more profit than Dell and HP for R&D. They can learn how to make their machines cheaper, and now that demand is down and no one is buying a computer at $500 they can lower prices. Now it costs Apple $100 to make a machine, so they sell them for $300. Tech moves forward and prices come down.
But once a new product comes to market (a faster computer) prices shoot back up because people are demanding faster machines. The Mac II (just for names sake) costs $700, since Apple is using a new way to make the machine with newer parts. It costs them $500 to make it. If more people demand it and Apple runs out of supply, people will be willing to pay more for it (check ebay for the iSight or when the iPhone was backordered... D300 and D3 are more examples)
Once equilibrium is hit price stays the same as does supply and demand.... the cycle goes on.
When you say, the demand for computers has gone up, so should the price, you're (not you MarsUltor anyone) missing the point. It's the demand for new tech, not just the computer and especially not the old stuff. If I went into the future and grabbed a 15" MBP with dual 3.0GHz processors and 8x BR burner I could sell it for $5000 since it's new and people want it. When supplies run out I can jack the price up to $7000 and someone would still buy it. As soon as the market doesn't demand it anymore, or when other vendors make their versions and we can't sell anymore price goes down.
Lastly let's look at milk. Farmers are taking their corn and turning it into bio fuel instead of feeding their cows because they can make more money. People need milk, but the supply is shrinking as more farms make bio fuel. Demand goes up... so does the price. On the other side, as bio fuels become more available and people demand more of it the price goes up until equilibrium. Once farmers make bio fuel easier and cheaper they can lower prices.
Sorry for the long post. It was hard for me to learn at first too, you know us Amurican be stuppid.
p.s. thanks admins...
feels about that
