Why is this statement wrong Economists argue that lower pric

Why is this statement wrong: \"Economists argue that lower prices will result in fewer units being supplied. However, there are exceptions to this rule. For example, in 1972, a very simple 10-digit electronic calculator sold for $120. By 2000, the price of the same type of calculator had declined to less than $5. Yet business firms produced and sold many more calculators in 2000 than they did in 1971. Lower prices did not result in less production or in a decline in the number of calculators supplied.\"

1. The statement ignores changes in quantity demanded.

2. The statement ignores changes in tastes.

3. The statement ignores changes in demand.

4. The statement ignores changes in the cost of production.

Solution

Solution :

The correct option is 4

Explanation : In 1972, a very simple 10-digit electronic calculator sold for $120 because the factors of production was very high. In the 1970 \'s, the cost of electronic components was very high and because of the high cost of components and other factors of production , the price of electronic calculators was also high . However , by the year 2000 , the cost of components has drastically reduced and thus the price of calculators has gone down . Therefore the supply of calculators is on the rise as there is an ever increasing demand for calculators despite the reduction in the price of calculators .