Problem
The cost of many electronic devices has fallen appreciably since they were first introduced. For instance, computers, cellphones, microwave ovens, and calculators not only provide more functions but also do so at a lower cost.
i. Discuss the impact of lower production costs on the supply curve.
ii. What happens to the size of the consumer surplus and the producers surplus?
iii. If consumers demand for cellphones is relatively elastic, who is likely to benefit the most from the lower production cost?