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To: Skeeter Bug who wrote (95219)	2/5/1999 2:21:00 PM
From: edamo	Read Replies (2) \| Respond to of 176387

economics 101 "basic economics....falling prices....weaker demand" perhaps you should get the latest version of economics 101...what you espouse held true when our economy was purely smokestack, and commodity driven...in today's world, evolving technology has created manufacturing efficiencies. this coupled with economy of scale can encourage falling prices in high demand environment......he who produces at a lower cost can gain market share by decrease in price without sacrifice of margin. your point is very valid in the case of a commodity as oil, but not so applicable in an area such as consumer electronics. beware of blanket statements, they sometimes hinder opportunity..

To: Skeeter Bug who wrote (95219)	2/5/1999 3:02:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Skeeter Bug, you said: au contraire, mon frere. falling prices have to do with demand. the weaker the demand, the more prices fall. BASIC ECONOMICS. True, but if you turn the page in your economics text book you will find that firms are profit maximizers. That means that decreasing prices can stimulate demand and increase profits (elasticity of demand is the key here). This has proven to be true in technology. The part that you are missing is that technology is not a static commodity. Oil is static; gold is static. A bbl of oil today is much like a bbl of oil will be five years from now -- the same is true of gold. But CPUs and computers and software are dynamic. You probably would have a hard time selling today's chips at 10% of their current prices five years from now. Lower prices create greater demand which allows component manufacturers to to lower their costs through greater efficiencies in production methodologies which allows reduction in costs to create greater technology profits which coincidentally increases demand which ... TTFN, CTC

To: Skeeter Bug who wrote (95219)	2/5/1999 5:25:00 PM
From: BGR	Read Replies (1) \| Respond to of 176387

<Very OT> Skeeter Bug, I have always considered Economics 101 to be a very dangerous course which IMHO should come with statutory warnings. It gives people the confidence that they have become instant masters in - among others - Game Theory, International Trade and Econometric techniques all at the same time, hence empowering them to comment in public forums about how Lemon laws can cause acidity and how Dutch auctions are the best places to buy diamonds. But let's concentrate on falling prices and demand relationship. Apparently, you think that even if better technology reduces production cost the manufacturers will invariably pocket the difference and never pass on the benefits to the consumer, unless there are falling demand concerns. My dear friend, this simplistic model doesn't hold true even in the very basic of the commodities, food. As production costs have decreased in the agro-business prices of food products has plummeted. This effect is most pronounced in the developing nations which successfully went through a Green Revolution like India and China. So, do you think that even with increasing populations the demand for food is going down in these countries? -Apratim.