The Cost of Computers Over 10 Years Essay Example | Topics and Well Written Essays - 1750 words

The Cost of Computers Over 10 Years - Essay Example (Moore, 1965). Simply put, computers have been getting exponentially more powerful since their invention. How is this important to an economic analysis of computer costs? For many years this has been a simple formula for predicting the future cost and efficiency of computers. If we compare the specifications of a computer to what consumers require in order to complete tasks, run software, surf the Internet, and much more, we can see that the advancement of integrated circuits is much faster than the requirement of users. For example, if a student required a computer 10 years ago research, write papers, surf the internet, and communicate, a standard pc of that era would be perfectly suitable. The same student today would require a computer able to perform very similar tasks to the computer of 10 years ago, ignoring the need for graphical gaming and media. Therefore, a computer with the same specifications today and one 10 years ago, or even 1 year ago, can be created with less transis tors, meaning the cost of production is less too. The second law that applies to our analysis is Metcalfe's Law. Robert Metcalfe, the inventor of Ethernet, stated that the value of a network is proportional to the square of the number of connected users of that particular system. (Metcalfe, 1993). Originally talking about telecommunications networks, this law can be applied in general to the Internet – a huge, if not the biggest, driving force of the computer. Simply put, it means that every one new user added to a particular network adds more value to that network. A common example of this is the fax machine comparison. â€Å"The first person to buy a fax machine was a fool.† (Metcalfe, 1993) A user would find it quite pointless to send themselves a fax and having no recipient,... This paper approves that the last factor regarding supply and demand is the substitution effect and alternative effect. Although each good is unique, it has substitutes – there are always other goods that can be used in place of it. Twenty years ago, it was very common to write one's letters manually and type script on a typewriter. Ten years ago, the computer was certainly very popular, although many alternatives were considered over owning a personal computer. Typewriters were still in use, Internet cafes were popular, and sharing computers was considered quite acceptable. Today, we can observe that the demand for typewriters has decreased, as it is an inferior substitute. Furthermore, the supply of typewriters is also reduced, as it is comparatively more expensive to produce than computers. In the same way, personal computers are affordable, resulting in a reduction in Internet cafes and computer sharing. Cost plays a vital role in determining which products a buyer will su bstitute in order to maintain viability. This report makes a conclusion that we can observe the many forces that have attributed to the success of the personal computer and laptop. We can perhaps look to our formula, laws, and economic models to predict the cost of the computer, or technological equivalent, in the future. Although, if in this short span of time computers have become such a ubiquitous part of our daily lives, we can only wonder as to the extent of influence it will have on us in the next 10 years.