How the product will sell and due to the low supply

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Question: Class, cell phones can be quite expensive today, so I was curious as to exactly how much cell phones went for back in the "dark ages" and discovered that one of the earliest models of phones sold to the public back in 1983, the Motorola DynaTech, was sold for around $4,000 which is equivalent to $9,000 currently (Meyers, J., 2011). Cell phone prices gradually declined from there with the IBM Simon sold in 1993 for $899 which is approximately $1,300 today (Meyers, J., 2011). The evolution of the phone really put things into perspective in that new products tend to have higher prices that gradually decrease over time as the life cycle progresses. It is important to consider why that is exactly? Do companies create these products just a few at a time to get a feel of how the product will sell and due to the low supply, is this the reason why the cost is high? Is it the cost of development? Are production costs higher at the beginning?

Reference no: EM133298311

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