Technological advancements in the 1990s, particularly Moore's Law and VLSI technology, reduced the cost of computer chips. This led to a large fall in computer chip prices between 1990 and 2002. The key factors were the rapidly evolving chip production technology, which increased supply, and the demand curve for chips, which shifted upwards. The declining chip prices significantly impacted the computer and software industries by reducing costs, increasing demand, purchasing power, market size, and the number of buyers. Countries also benefited from increased exports and foreign exchange earnings.

1. PRESENTATION
ON
MANAGERIAL ECONOMIOCS
UNDER GUIDANCE OF
D r. TA M I N D E R K A U R

2. During the 1990s, technological
advancement reduced the cost of computer
chips.

3. Moore’s law and VLSI. Moore’s law states that the number
of transistors placed inexpensively on an integrated circuit
doubles every two years.
This law was made by Mr. Gordon Moore, Intel co-
founder.
This law was made in 1970 but it was applied in
1990, because the demand of personal computer increased
and also because of VLSI technology.

4. Between 1990 and 2002 there was a large fall in
the price of computer chips. Here are some
components of the explanation of this dramatic
price fall.

5. • Demand for chips was so great that there was a
shortage, analysts were forecasting record growth
and manufacturers were unveiling plans for dozens of
$1bn chip factories. . . .
• The shortage rapidly turned into surplus, and
the price of dynamic random access memory (D-
Ram) chips-the basic memory chips for PCs-has
dropped by about 65 per cent

6. The story points to two key elements to the
developments in this market. First, the technology of
producing computer chips is evolving rapidly. This causes
the market supply curve to shift rightwards continually.
The second element is the negatively sloped demand
curve, which shifts in some periods.
The trend decline of '20 per cent to 30 per cent each
year' is clearly shown in the chart. So is the abnormal
period

8. The Technological advancement no doubt
reduced the cost of Computer chips that affected
the computer market in the area. The low cost of
computer chips has the following affects in the
computer industry:

9. COST OF GOOD SOLD-REDUCED
The cost of chips reduced not only affected the computer
market but also computer software market. Although the
software market has no directly affects with the low cost of
computer chips. But As the Demand rule says that prices affect
the demand for goods. so, the chips cost not only increase the
demand for computers but also reduced the computer
products.

10. SOFTWARE DEMAND SHIFT-UP
The other impact of reduced cost of chips was the high
demand for software, although its not directly related to
it, but now those people who was not able to buy
computers are now able to buy it with new software's.
The computer market also affected the software market
due to reduction in price of chips.

11. PURCHASING POWER-HIGH
This reduction of chip price had also affected
positively the purchasing power of the buyer. The
person who was not able to buy the computer can
now buy it easily. Because the price reduction of
chips shifted the computer prices down as well.

12. SIZE OF MARKET INCREASE
With all other affects in the industry, a positive
affect was the size of computer market. It had
greatly increased the number of buyers in the
economy.

13. IMPACT ON FOREIGN EXCHANGE
The country earned a huge foreign exchange through
export of chips and computer. The manufacturers of
chips and computers earned lot of profit through large
volume of sales.

14. NUMBER OF BUYERS INCREASE
The reduced cost of chips had also affected the
number of buyers. International transaction also
increased in that way.

15. THANK
YOU…..
PRESENTED BY
SUKHJIT
RAJAT
TARUN
MOHIT
GOURAV