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Supply, Demand, and the Price of Laptop Computers

September 1, 2005

The poor Associated Press. It attributes the fall in prices to an increase in demand on the part of college students, but that would raise prices (assuming supply relatively constant). It is competition and increasing efficiency on the supply side that have reduced the price of laptops (VCRs, DVD players, and so on) and thus made laptop purchases attractive to more and more students, not the reverse. This is the market at work to make yesterday's luxuries available to the masses. (At the end AP does make a brief concession to supply factors, but still makes it clear it doesn't understand the long-term, free-market process.) No wonder journalists are such statists. They don't even understand the basic supply-demand model covered in the first two weeks of ECON 101.

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