Effect of new technology on consumer

electronics market with example

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 Table of content
1. Introduction 3

1.1 Important of Technology 3

1.2 History of Air Cooler 4

2. Market Theory 5

2.1 Supply 5

2.2 Factors of Supply Curve Shift 5-8

2.3 Demand 8

2.4 Factors of Demand Curve Shift 8-10

2.5 Elastic and Inelastic 10

3. Effect of technology on air cooler market 11

3.1 Effect on Supply 11

3.2 Effect on Demand 12

3.3 Elastic or Inelastic goods 13

4. Findings 14

5. Conclusions 15

6. References 16

1) Introduction

1.1 Important of technology

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 Technology gives various purposes and means and different things to different people.
Technology can be found at everywhere in today’s world. Technology makes the world function
more efficiency. When some are reluctant to embrace new technology advancements, most of
have some form of technology in our household. The smartphone and home computer are
probably the two pieces of technology which most households have. There are no arguments
which technology has become important in our daily lives for better. Here’s how;

Education

Technology innovations are tested in the most of educational system. Technology has
advanced the testing options available to most school systems with computers and iPads in just
about every classroom.

Communication

Technology has improved communication whether in business or personal life. You can
easily improve communication level with applications like Skype, Line and other communication
applications.

Supplies

When technology are advanced, people are able to access to supplies such as fresh water,
air and food from like these devices water cooler, air cooler, air cleaner, refrigerator and so on.

Security

Technology can make any family or business to be safe. When you are away or much
more, you can secure your financial data and protect your home with many security devices that
are innovated by technology.

Space

If there is no technology, we cannot have advanced so far in the space industry. NASA
uses technology to find new planets, to monitor space and much more. Technology is important
to learn more about galaxy.

So technology is important for us. Finally in society, we have to embrace the technology
advancements

1.2. History of Air Cooler

As summer approaches, bringing with it soaring temperature and unbearable humidity,

millions of people will turn on that marvel of discovery and invention the air cooler.

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 These comfort units which home owners activated with the care of flipping a switch are
complex electro mechanic systems, the end products of engineering in cooling, controls and
energy efficiency. Air cooler was named among the 10 greatest mechanical engineering
achievements of 20th century in 2000 according to a survey of ASME members.

Actually air cooler has been occurred in second century China by Ding Huane. And then
Bejamin Franklin conducted experiments with evaporations and alcohol to get freezing
temperatures in 1758.The first air cooler was invented by Willians Havsland Carrier in 1902. He
invented air cooler to send cool air through coils filled with cold water in order to be removing
moisture to control room humidity. In 1933, this device became the model in the growing U.S
market place.

Air cooler is most popular device to cool down oneself in summer. The middle and lower
class people can afford to buy it. A lot of features that is used in production air cooler makes less
expensive in production. The production process is very easy and so no need skillful labors.

According to the QYR, the declining price of air coolers has become a major concern for
the most of people.

2) Market Theory

Market is a group of buyers and sellers of a particular goods and services. The buyers
defined as a group of the demand for the product and the sellers as a group of the supply of the

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product. A market in which there are many buyers and many sellers so that each has a negligible
impact on the market price.

2.1 Supply

The quantity supplied is the amount which sellers are willing and able to sell. There are
many determinants of quantity supplied. Among them price plays a special role. Law of supply
show that when the price of good rises, the quantity of supplied rises too. So price directly
related to quantity supplied.

2.2 Factors of Supply Curve Shift

Supply curve is upward. If the quantity supplied is increased, the supply curve shifts to
the right and if the quantity of supplied is decreased, the supply curve shifts to the left. There are
many factors to shift the supply curve. They are;

Input Prices

When the price of one or more input product rises, producing is less profitable and firms
produce less output. If input price falls, producing is more profitable and firms produce more
output.

Figure (1) Supply curve shift according to input price

The supply curve is upward. If the quantity of supplied increases, the supply curve shifts
to the right and if the quantity of supplied decreases, the supply curve shifts to the left.
According to figure (1), if input price raises, the quantity of supplied decreases so the supply

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curve shifts to the left from S1 to S3. And if input price decreases, the quantity of supplied
increases so the supply curve shift to the right from S1 to S2.

Technology

The technology for turning inputs into outputs is determinant of supply. The invention of
machine reduces the amount of labors. By reducing production costs, the advanced technology
raises the supply.

Figure (2) Supply curve shift according to technology

According to figure (2) technology reduce labors and production costs. So the supplier
gets more profit from outputs and they will produce more so the supply curve shifts to the right
from S1 to S2.

Expectations

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 The amount of outputs a firm supplies depends on its future expectations. For example, if
a good price will be raised in the future, the supplier will store a good and distribute less in the
market.

Figure (3) Supply curve shift according to expectations

According to figure (3) supplier have expectation that their goods have a raised price in
the future, so they keep their product and distribute less in the market. So supply curve shifts to
the left S1 to S2.

Number of sellers

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 In addition to the preceding factors, which influence the behavior of individual sellers,
market supply depends on the number of these sellers. If some firm retire from production of
some goods, the supply of those goods fall in the market.

Figure (4) Supply curve shift according to number of sellers

According to figure (4), if some firms will retire from production of some goods, the
quantity supplied of those good falls and the supply curve shift to the left.

2.3 Demand

The quantity of demand is the amount of goods or services that buyers want to and able
to buy. Law of demand highlights that other things equal, the quantity demanded of a good
decreases when price of the good raises. So price is inversely related to quantity demanded.

2.4 Factors of Demand Curve Shifts

Demand curve is downward. If the quantity of demanded quantity is increased, the

demand curve shifts to the right. If the quantity of demanded quantity is decrease, the demand
curve shifts to the left. There are many factors that can shift the demand curve. They are;

Income

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 A lower income can spend less in total, so would have to spend less on goods, if income
decreases the demand for a good falls. A higher income can spend more in total, so would have
to spend more on goods, if income raises the demand for a good would be raised.

Figure (5) Demand curve shifts according to income

According to figure (5), if income rises, the quantity of demanded raises and demand
curve shift to the right from D1 to D2. If income decreases, the quantity of demanded decreases
and the demand curve shift to the left from D1 to D3.

Prices of Related goods

When a fall in the price of one good reduces the demand for the other good, the two
goods are called substitutes. Substitutes are often pairs of goods that are used in place of each
other such as hot dogs and hamburgers, movie tickets and vehicle rentals. When a fall in the
price of one good raises the demand for another good, the two goods are called complements.
Complements are pairs of goods which are used together such as gasoline and automobiles,
computer and software.

Taste

The most obvious determinant is taste. If the taste is good, buy more and if taste is bad,
buy less.

Expectations

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 Expectations of the future can effect on demand quantity. For example, if you earn more
income next month, you can use more money on goods and save less for this month.

Numbers of buyers

If there are new buyers increase for some goods, the demanded quantity for those goods
increase and if some buyers leave from some goods, the demanded quantity for those goods
decrease.

The demand curve shows the demanded quantity of a good when it factors varies that
influence buyers. When one of those factors change, the demand curves change.

2.5 Elastic and Inelastic

Elastic and inelastic mean that consumers respond to the higher price. Elasticity is a
measure of how sellers and buyers respond of changes in market condition.

The price of elastic of demand shows the quantity of demanded responds to a change in
price. Goods with many substitutes have more elastic as buyers have a choice to switch from one
good to another good.

Necessities are inelastic and luxuries are elastic. Goods tend to have more inelastic over
short time horizons and more elastic over long time horizons.

3) Effect of technology on air cooler market

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 According to market, we have to show effect of technology on supply market and
demand market for air cooler. In this chapter, we can see the effect of technology illustrated with
figures.

3.1 Effect on Supply Market

We can see the factors that can effect on supply in the previous chapter. Technology is
one of them. Technology reduces the cost of production. And the production processes are made
by machine and no need high skilled labors. So we can reduce labors. So the profit can be rise
up. Therefore a lot of air cooler brands are distributed in the market. So technology effect on air
cooler supply market is that can increase the quantity of supplied. That can be shown in figure as
follows;

Figure (6) Effect on Supply Market

According to the figure, technology can reduce production cost, labors and can make to
get more profit in production of air cooler, the quantity of demanded increases and the demand
curve shift to the right from S1 to S2.

4.2 Effect on Demand Market

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 Like the supply market, demand market has various variables that can change demand
market. Among them, selling price and income of buyers play a vital role in changing demand
market.

According to technology advanced, the living standard of society is changed. We can see
in the chapter one, air cooler is most popular item among middle and lower income people.
Compare with air conditioner, air cooler is less expensive and it can give more comfort in the
summer. So the middle and lower people love to buy air cooler than air conditioner. But in our
country, some of people cannot afford to buy it due to their income. It is exception. That will be
shown for elastic or elastic goods at the later. Summary, according to the price of air cooler, most
of people are in more interest to buy it than to buy air conditioner. According to technology
advanced, the latest air cooler can give the same quality as the air conditioner and it price is
cheap. So the quantity of demand will be increased too. That will be shown in the figure like as;

Figure (7) Effect on Demand Market

According to figure, the quantity of demand is increase, so the demand curve shift to the
right from D1 to D2.

3.3 Elastic or Inelastic Goods

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 We can defined air cooler as elastic for two main factors. As first, there are a lot of
competitors for air cooler. For example fun and air conditioner. So if its price is increased or
decreased, the quantity of demand changing is more than it price changing amount. For example,
if the air cooler price is increased, people who can afford to buy air conditioner would prefer to
buy air conditioner. And people who cannot afford to buy because of its price would more prefer
to choice fun. And we can say air cooler is luxury goods for lower income people. So we can
defined air cooler as elastic goods.

4) Findings

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 According to technology advanced in electronic device, especially in air cooler we can
see its positive effect on the market. From the supply side, technology reduces production costs
and labors. So it can make more profit for the suppliers. So a lot of air cooler brands in the
market today. So the quantities of supplies increase because of technology, its lower production
costs and its profits.

From the demand side, air cooler is most popular device for everyone today. According to
global warming, so people use devices to get cool air in the summer such as air-con, air cooler,
fun and so on. Among them air cooler is cheap than air con and the quality we get is more than
the price we paid it for. So people buy it more than others. So the quantity of demand is
increased because of its cheap selling price and increasing in income of buyers.

And we can define air cooler as elastic good for two reasons. The first one is it has a lot
of substitution devices such air con, fun and so on. And it can be luxury goods for lower income
people.

5) Conclusions

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 Technology plays a vital role in our daily life. There are five major reasons why
technology is so important. Today technology is advanced in education, communication,
supplies, security and space. Today everybody use their telephones for communication. People
use computers for their education. They also use refrigerators, air con, air cooler, and water
cooler and so on for their supplies to get fresh air, water and food. We use technology for our
security and we use technology to explore our galaxy. So air cooler is one of the technologies
advanced. It can be called as technology advanced supply. According to technology effect, the
supply market for air cooler is increased because technology reduces its production costs and
raises its profit.

According to technology is advanced, the living standard is also high. According to

income is higher than in the past and the selling price of technology, people prefer to use air
cooler. Air cooler is popular device for lower and middle income people. So the demanded
quantity is also increased. And at last, to be perfect the market theory, we have to say air cooler is
elastic goods for two reasons. They are that air cooler is luxury goods and it has various
substitution goods such as fun and air conditioner.

6) References

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Mankiw. G. N., 2008, Principles of Microeconomic, Fifth Edition, p. 66-92

https:// www.ASMEpublicinformation.com/the-history-of-air-cooler/

https:// www.ckab.com/ air-cooler-market-analysis-major-competitor-and-strategies/

https:// www.guyandtheblog.com/ 5-major-reasons-why-technology-is-so-important/

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