: What effect will an improvement in computing technology have on the distribution of total economic value in th?
What effect will an improvement in computing technology have on the distribution of total economic value in the computer market?
The producer surplus will increase, and the consumer surplus will decrease.
The consumer surplus will increase, and the producer surplus will decrease.
Both the consumer surplus and producer surplus will increase.
Both the consumer surplus and producer surplus will decrease.
Answers and Views:
Answer by simplicitus
Terrible question It all depends on the nature of improvement in technology.
For example, high performance computing (of the sort done by NSA and the Defense Department nuclear labs) is not subject to the same sort of economics as the rest of the industry (for these consumers, cost is not a factor, markets do not clear on price, etc.) Since their demand curve is flat, there is no change in consumer surplus.
https://en.wikipedia.org/wiki/Economic_surplus
More generally, a change that just lowers the supply curve would usually increase both, but a change that flattens the supply curve might well increase consumer surplus while decreasing producer surplus. (A perfectly flat supply curve – as in perfect competition – would have no producer surplus.)
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