There are long-run economies of scale in the manufacture of computers and their components. There was a shift in demand away from desktop computers and toward notebook computers around the year 2001. What are the short- and long-run effects? Illustrate your answer with two diagrams, one for the notebook market and one for the desktop market. Account for the fact that the two products are substitutes, so that if the price of notebook computers rises, some consumers shift to desktops. (To answer this question, start with a time 0 and a market in long-run equilibrium. Shift demand for notebooks out and demand for desktops in.)

What happens in the short run?

What happens in the long run to the prices of each? What does that price effect do to demand?