You manage a firm assembling centrifuges, which incorporate…
You manage a firm assembling centrifuges, which incorporate brushless electric motors sourced from suppliers operating in a competitive industry. a) Technological innovations are expected to lower the unit production cost for (brushless) electric motor manufacturers. Based only on this information, what do you predict will happen to the price your firm pays for these motors? b) How might your prediction in part (a) change if you also learn that demand for drones (which use the same motors) is expected to significantly increase? Explain the combined effects on the brushless electric motor market equilibrium price.