PCs and Inflation

Don't underestimate the amazing power of American innovation. This from the Vox economic research site:

One of the most significant new goods in the twentieth century was the personal computer (PC). The first successfully mass-produced PC was the Apple II. Released in 1977, it consisted of a 1 megahertz microprocessor, 4 kilobytes of random-access memory (RAM), no hard disk, and an audio cassette interface for program loading and data storage. The computer retailed at approximately US $1,200. Rapid technological progress led to consistent improvement in the Apple II following its release. For example, in 1978 the floppy disk drive peripheral, far superior to cassettes, became available.

Rapid technological progress has since fueled continual quality improvements and declining costs of production. Today's computers are often equipped with multi-core processors running at over 3,000 megahertz, gigabytes of RAM, and hard drives capable of storing hundreds of gigabytes of data.

Quality improvements in computers and computer production have resulted in an enormous fall in quality-adjusted PC prices. In fact, prices have dropped at an astounding rate of 25% per year. Thus, a PC today is more than 700 times less expensive than one in 1977.

Tags: computers | inflation | prices

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