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<blockquote data-quote="Mikee" data-source="post: 429902" data-attributes="member: 76567"><p>In economics the way prices are determined is due to what is known as the 'long-run' and 'short-run'. Currently, the prices of graphics cards have risen because producers of gpu's are currently in the short-run change of demand. In other words, lets assume that they have two factors of production, labor and capital (capital being factories, machinery, equipment etc.) In the short run, one of these factors of production is fixed, that is in this scenario NVIDIA for example, can hire more labor to produce GPU's but because they can't buy more factories asap and machines asap they're production function yields what is known as a the diminishing marginal return. I.e lets say we have 1 factory and 5 people working, we hire one more, that new hire will produce more product than the last, then we keep hiring. But we will get to the point where we hire lets say 10 people and now the 10th person actually causes person 9 to produce less, because they don't have enough space in the factory to work alongside each other (e.g. they bump heads, get in each others' way etc).</p><p></p><p>What happens overtime, is the firm (nvidia) will go into the long-run, so they will buy new factories, new machinery etc. in order for them to be able to produce more and supply more, as a result of a greater production.</p><p></p><p>In other words, prices in the future will naturally go down in either scenario. Either companies will adjust their inputs for the long-run (and all factors of production are variable in the long-run) or people will stop buying gpu's and demand will drop causing prices to fall that way.</p><p></p><p>The question now lies into how long you want to wait, the long-run could be as long as another year. That is something, we can not decide for you; the decision as to how much patience you have.</p></blockquote><p></p>
[QUOTE="Mikee, post: 429902, member: 76567"] In economics the way prices are determined is due to what is known as the 'long-run' and 'short-run'. Currently, the prices of graphics cards have risen because producers of gpu's are currently in the short-run change of demand. In other words, lets assume that they have two factors of production, labor and capital (capital being factories, machinery, equipment etc.) In the short run, one of these factors of production is fixed, that is in this scenario NVIDIA for example, can hire more labor to produce GPU's but because they can't buy more factories asap and machines asap they're production function yields what is known as a the diminishing marginal return. I.e lets say we have 1 factory and 5 people working, we hire one more, that new hire will produce more product than the last, then we keep hiring. But we will get to the point where we hire lets say 10 people and now the 10th person actually causes person 9 to produce less, because they don't have enough space in the factory to work alongside each other (e.g. they bump heads, get in each others' way etc). What happens overtime, is the firm (nvidia) will go into the long-run, so they will buy new factories, new machinery etc. in order for them to be able to produce more and supply more, as a result of a greater production. In other words, prices in the future will naturally go down in either scenario. Either companies will adjust their inputs for the long-run (and all factors of production are variable in the long-run) or people will stop buying gpu's and demand will drop causing prices to fall that way. The question now lies into how long you want to wait, the long-run could be as long as another year. That is something, we can not decide for you; the decision as to how much patience you have. [/QUOTE]
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