Financial writer Michael Lewis once remarked, “The sad truth, for investors, seems to be that most of the benefits of new technologies are passed right through to consumers free of charge.”
a. What do you think Lewis means by the benefits of new technology being “passed right through to consumers free of charge”? Use a graph like Figure 12.8 to illustrate your answer.

b. Explain why this result is a “sad truth” for investors.

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Price (dollars per dozen) $3 2 0 15,000,000 S₁ 40,000,000 D Quantity (dozens of eggs) (a) Market for cage-free eggs sold in farmers' markets Price and cost (dollars per dozen) S₂ $3 0 Economic profit Farmer Gillette earns when the price of eggs is $3 per dozen 40,000 50,000 (b) Farmer Gillette's farm MC ATC D₁ = MR₁ D₂ = MR₂ Quantity (dozens of eggs)