The world output of transistors, the main components of microprocessors, has exploded from a little more than 1 billion in the late 1960s to more than 1 quintillion today. During this same period, the average price of a transistor has fallen from about $1.00 to less than $0.000002, or two one-thousandths of a cent. Thus, the transistor industry is an example of a decreasing cost industry.

How does the decrease in transistor prices help explain why average (constant-quality) computer prices have declined by 99 percent since the 1960s?