Question

In several markets for digital devices that can be viewed as perfectly competitive, steady increases in demand for the required minerals ultimately have generated long-run reductions in the market prices of these devices. Describe in words the types of adjustments that must have occurred in these markets to have brought about this outcome, and evaluate whether such digital-device industries are increasing, constant, or decreasing-cost industries.

Short answer

This fashion, long-run reductions within the worth of these devices have occurred.

Step-by-step solution

Introduction

The expanding market is one where the manufacturing costs rise as more businesses compete. When there are just a few players during this industry, the costs for production are low. When a large proportion of individuals arrive, meanwhile, demand for money increases.. during this industry, resources are limited, i.e., finite. Subsequently, the costs of these resources rise. this instance creates an increasing-cost industry.

Given Information

In several markets for digital devices which will be viewed as perfectly competitive, steady increases in demand for the required minerals ultimately have generated long-run reductions within the market prices of these devices.

Explanation

As demand for digital devices increased, more producers have entered the marketplace for digital devices while many existing producers has expanded their production.

This increase in supply of minerals has resulted in fall in their prices. during this fashion, long-run reductions within the worth of these devices have occurred.

An industry where increase in output finishes up in long-run reductions in input cost yet as prices is termed as decreasing cost industry. As digital device industry is experiencing same phenomenon, it should be termed as decreasing cost industry.