You are the manager of a midsized company that assembles personal computers.You purchase most componentssuch as dynamic random access memory (DRAM)in a competitive market.Based on your marketing research, consumers earning over $75,000 purchase 1.3 times more DRAM than consumers with lower incomes.One morning, you pick up a copy of the The Wall Street Journal and read an article indicating that a new technological breakthrough will permit manufacturers to produce DRAM at a lower unit cost.

a. Based on this information, what can you expect to happen to the prices you pay for dynamic random access

memory? State the determinant of demand or supply that is affected by the technological breakthrough and the

direction of movement of the demand or supply curve.

b. How does your answer change if, in addition to this technological breakthrough, the article indicated that

consumer incomes are expected to grow over the next two years as the economy finally pulls strongly out of

recession?State the determinant of demand or supply that is affected by the increase in consumer incomes

and the direction of movement of the demand curve or supply curve.

c. Draw a single supply and demand diagram to illustrate your answers in (1a) and (1b) above. State explicitly if

either price or quantity cannot be determined as a result of your analysis.