Answer to Question #85761 in Macroeconomics for diamond Smith

Question

How would you adjust the price of the 1962 TV to allow for the difference in quality from the 2012 model? Was it half good? A tenth as good? Is something you can even start to put a number on?

Answer 1

Сonsider the change in the cost of TVs on the example of South Korea. During this period, the production and availability of TVs among consumers becomes more widespread, compared with the birth of TV.

Prices quickly dropped, however, mostly because people weren't buying. RCA's CT-100 dropped to $495, or $4,440 in today's money ($21.02 PPSI for the 21-inch TV), not long after launch. By the mid-'60s, when color programming really took off, color TVs were even cheaper. You could even get a massive 23-inch screen for $350 ($2,517).

As for 2012, it was then that a rather serious change occurred in the technology of televisions.

Today's OLEDs are brighter, have better color, have higher resolution, and more. 4K was still on the horizon , but already creating waves.

The VT50 series was an amazing television for 2012, and not ridiculously expensive: $2,500 for a 55-inch. In today's dollars, that's a fairly close $2,680. And price-per-screen-area is pretty close to today's OLED. OLED's MSRP anyway.

It's a little misleading, though, because plasmas always had a fantastic price-to-performance ratio. The similarly priced LCDs didn't look as good and weren't as well reviewed. The great LCD of 2012 that did look amazing was the slightly larger Sharp Elite PRO-60X5FD, which retailed for a brutal $6,000 ($3.91 PPSI). Think about that: you can get a 65-inch OLED today that's larger and HDR/WCG for a fraction of the price of that TV. That's progress.

The biggest disruptions come at the lower end of the market, something far harder to track. In the '50s, Westinghouse and RCA were some of the only manufacturers of this new technology. Now there are dozens of companies making TVs. You can get a great TV now for less than $0.50-per-square-inch of screen. That's an old trend, too. As new manufacturing powerhouses come in, they aim for the bottom of the market. They first offer something inexpensive, then later, something inexpensive and good, then eventually something good and expensive. It happened with Japan in the '70s and '80s, it happened with Korea in the '90s and 2000s, and it's happening now with China.

But in general, prices drop, so companies create something new that's exciting. In this case that means bigger, better, and because so many parts are similar, cheaper. All this has happened before and will happen again.

Analyzing the figures indicated above, we can state a tenfold increase in the nominal price of TVs in South Korea