Microeconomics for MBAs 7. The Economic Way of Thinking for Managers. Microeconomics for MBAs develops the economic way of thinking through problems that MBA students will find relevant to their career goals. Maths is kept simple and the theory is illustrated with real-life scenarios | Chapter 2 Competitive Product Markets 20 Competition in the Short run and the Long Run One of the best examples of the workings of both price and nonprice competition is the market for hand calculators. Since the first model was introduced in the United States in 1969 the growth in sales advancement in technology and design the decline in prices in this market have been spectacular. The early calculators were simple some did not even have a division key and bulky by today s standards. By 1976 they had shrunk from the size of a large paperback book to a tiny two by three-and-a-half inches for one model and sales exceeded 16 million. While quality improved prices fell. The first calculator which Hewlett-Packard sold for 395 had an eight-digit display and performed only four basic functions addition subtraction division and multiplication. By December 1971 Bowmar was offering an eight-digit four-function model for 240. The next year in an attempt to maintain its high prices Hewlett-Packard introduced a sophisticated model that could perform many more functions still for 395. By the end of the year Bowmar Sears and other firms had broken the 100 barrier and firms were offering built-in memories AC adapters and 1 500-hour batteries to shore up prices. At the year s end Casio announced a basic model for . In 1973 prices continued to fall. By the end of the year National Semiconductor was offering a six-digit four-function model for and Hewlett-Packard had lowered the price of its special model by 100 and added extra features. In 1974 six-digit four-function models sold for as little as . Eight-digit models that would have sold for over 300 three or four years earlier carried price tags of . By 1976 consumers could buy a six-digit model for just . All this happened during a period when prices in general rose at a rate unprecedented in the United States during peacetime. Thus the relative prices of calculators fell by even more than their dramatic
