Question

LCD, LED, Plasma Impact: Curved-box TV Set To Be History In 4 Years CRT televisions will soon disappear from the market as the focus has shifted to LCD technology. According to analysts the speed of adoption of newer technology is very fast. CRT television segment will eventually be phased out of the market. Source: The Economic Times, December 27,2010 a. How has LCD technology changed the production possibilities of television sets and other goods and services? b. Sketch a \(P P F\) for television sets and other goods and services before LCD technology. c. Show how the arrival of LCD technology has changed the \(P P F\) d. Sketch a marginal benefit curve for video entertainment. e. Show how LCD technology which provides a better television-viewing experience to the consumer than the traditional CRT TV sets has changed the marginal benefit for video entertainment.

Short answer

LCD technology has shifted the PPF outward by improving efficiency and increasing production capacity. The marginal benefit curve for video entertainment now shifts upward due to the better viewing experience offered by LCD TVs.

Step-by-step solution

Understand LCD Technology Impact

LCD technology has revolutionized the television market by offering better picture quality, thinner designs, and lower energy consumption. This innovation has shifted production towards LCD TVs, making CRT TVs obsolete.

Draw PPF Before LCD Technology

Sketch a Production Possibility Frontier (PPF) showing the trade-off between the production of television sets (including CRT TVs) and other goods and services. Before LCD technology, the PPF would be relatively constant, indicating limited innovation.

Impact of LCD on PPF

LCD technology improves efficiency and productivity. Redraw the PPF to show an outward shift, reflecting the increased production capacity and better allocation of resources towards more efficient LCD TVs.

Marginal Benefit Curve for Video Entertainment

Draw a marginal benefit curve representing the consumer's willingness to pay for additional units of video entertainment. Typically, this curve slopes downward as the benefit decreases with each additional unit consumed.

Impact of LCD on Marginal Benefit Curve

Illustrate how the introduction of LCD technology (better quality and viewing experience) increases the marginal benefit of video entertainment, shifting the marginal benefit curve upward.

Key concepts

Production Possibility Frontier

The Production Possibility Frontier (PPF) is a crucial concept in economics. It shows the maximum possible output combinations of two goods or services that an economy can achieve when all resources are fully and efficiently utilized.
Imagine a graph where one axis shows the number of television sets produced, and the other shows other goods and services. Before the advent of LCD technology, the PPF would be relatively stable as the production of CRT (Cathode Ray Tube) TVs had been optimized.
However, once LCD technology emerged, it allowed for more efficient production. This is because LCDs are thinner, use less energy, and provide better picture quality. As a result, the PPF shifts outward. This outward shift means that the economy can now produce more televisions and other goods and services, thanks to improved technology.
In graphical terms, the outward shift signifies an increased capacity in production, reflecting better utilization of resources.

Marginal Benefit Curve

The Marginal Benefit Curve helps illustrate how much benefit or satisfaction a consumer gains from consuming an additional unit of a good or service. This curve typically slopes downward because the more of a good consumed, the less additional satisfaction is gained from consuming more.
Picture a graph with the quantity of video entertainment on one axis and the marginal benefit on the other. Initially, as consumers watch more TV or engage in more video entertainment, their satisfaction level is high. However, after a certain point, each additional unit of video entertainment brings less added satisfaction.
With the introduction of LCD technology, which enhances the viewing experience, the marginal benefit of video entertainment increases. Consumers now derive more satisfaction from each additional unit of video entertainment because of the superior quality provided by LCD TVs compared to CRT TVs. Consequently, the Marginal Benefit Curve shifts upward, indicating higher consumer satisfaction for each unit of video entertainment consumed.

Technological Innovation

Technological innovation plays a pivotal role in economic development and market dynamics. It involves the generation, application, and diffusion of new ideas and techniques to improve products or processes.
In the context of television production, LCD technology represents a significant technological innovation. By offering superior picture quality, thinner screens, and lower energy consumption, it disrupts the previously dominant CRT technology. This innovation increases production efficiency and alters consumer preferences and demand.
Moreover, innovations typically lead to a more dynamic and competitive market. Companies are motivated to invest in research and development to come up with better products. This constant cycle of innovation drives progress and economic growth.
Ultimately, technological innovation like LCD technology doesn't just make better products; it reshapes the entire landscape of the industry, boosts productivity, and enhances consumer experience. For the TV industry, this meant a rapid phasing out of CRT TVs and an embrace of advanced technologies like LCD.