Are computers the only products unaffected by inflation?

[brawnypandora0]

When I bought my computer in 2000, it cost me $1600. Now if I shop for a computer with the same specs, I'd only pay around $200. So since non-renewable resources (e.g. land, precious metals) are always inflating in price as are renewable resources (e.g. food, plastics), why do computer prices always drop?

Few consumers would buy a computer with such low specs today (I assume?) so why does this contradict the law of supply and demand?

[LowSky]

I wouldn't give anyone $200 for an eleven year old PC.

[VeeDubb]

Computers are affected by inflation as much as anything else, but there is a lot more involved in the cost of a computer than inflation.

While material costs have increased in line with inflation, manufacturing costs have come down due to advances in technology. Also, probably the biggest factor keeping the costs low, is the principle of economies of scale. 11 years ago, computers will still in a relatively small percentage of homes. That was when I was a freshman in community college, and you hardly ever saw a student with their own laptop. Today, half the kid in high school have their own laptop.

Because they have become so ubiquitous, and are sold in such huge volume, they can be sold with incredibly small profit margins while still allowing for enormous net profit. The wildly increased competition versus 11 years ago forces manufacturers to take advantage of this.



On a side note, you can't buy a computer with specs equivalent to what you bought 11 years ago unless you buy it at an antique shop. 11 years ago it probably came with a 40GB hdd, which is less storage than some tablets. It probably only had 512mb of RAM, but even if you went super high end, it didn't have more than 1gb, and some cell phones can do that now.

Cheap intel on-board GPUs have more graphics processing power than the best ATI or nVidia had to offer in 2000.

[brawnypandora0]

Computers are affected by inflation as much as anything else, but there is a lot more involved in the cost of a computer than inflation.

While material costs have increased in line with inflation, manufacturing costs have come down due to advances in technology. Also, probably the biggest factor keeping the costs low, is the principle of economies of scale. 11 years ago, computers will still in a relatively small percentage of homes. That was when I was a freshman in community college, and you hardly ever saw a student with their own laptop. Today, half the kid in high school have their own laptop.

Because they have become so ubiquitous, and are sold in such huge volume, they can be sold with incredibly small profit margins while still allowing for enormous net profit. The wildly increased competition versus 11 years ago forces manufacturers to take advantage of this.



On a side note, you can't buy a computer with specs equivalent to what you bought 11 years ago unless you buy it at an antique shop. 11 years ago it probably came with a 40GB hdd, which is less storage than some tablets. It probably only had 512mb of RAM, but even if you went super high end, it didn't have more than 1gb, and some cell phones can do that now.

Cheap intel on-board GPUs have more graphics processing power than the best ATI or nVidia had to offer in 2000.

So for this instance, the economic law of supply and demand has been contradicted right?

[VeeDubb]

So for this instance, the economic law of supply and demand has been contradicted right?

No, actually economies of scale, competition, and supply & demand are all closely related. In a way, this is a perfect example of supply and demand. While demand has increased by massive proportions, supply has not only kept up with demand, but surpassed it. Meanwhile, alternatives to the PC (tablets, smartphones, etc) have made the demand inelastic. While everybody wants one, they're becoming less and less mandatory. There was an interesting series of articles a few months ago over at precentral.net from a guy who was burglarized and found himself with no television or computer, but still with his HP touchpad tablet. The upshot being that people are willing to wait around for deal and make do with an older computer or an alternative device (like a tablet) until they come across a good price.

[KiwiNZ]

This looks like homework again