Suppose a technological advance reduces the cost of making computers.

a. Draw a supply-and-demand diagram show what happens to price, quantity,

consumer surplus, and producer surplus in the market for computers.

b. Computers and adding machines are substitutes. Use a supply-and-demand

diagram to show what happens to price, quantity, consumer surplus, and producer

surplus in the market for adding machines. Should adding machine producers be

happy or sad about the technological advance in computers?

c. Computers and software are complements. Draw a supply-and-demand diagram

to show what happens to price, quantity, consumer surplus, and producer surplus

in the market for software. Should software producers be happy or sad about the

technological advance in computers?

d. Does this analysis help explain why software producer Bill Gates is one of the

world's richest men?