But I can pay 10x of what I am paying for my electronic equipment, if needs be, and all chances are you can too if you are posting here.
I can't. And as already pointed out, costs for large tech companies or datacenters are already dominated by such apparently trivial factors as energy costs - a 10x increase in raw processor price would be catastrophic.
The income distribution being what it is (power law, see Pareto distribution), the costs can be raised massively while retaining the revenue as long as the cheap alternatives are not available. More than 50% of your customers can and would pay >2x (if the alternatives weren't available). Think about it. 20% own 80% of everything (or even more skewed), and its like this all the way to the top. With this kind of income distribution the luxury market alone can support entire industry along with progress. Look at Apple, and how successful it is even though the products are not all that popular worldwide - they make huge margin.
/sees a lot of vague economic buzzwords, no specific arguments or data on price elasticity
You will notice that the processor companies are only able to engage in price discrimination up to around $1000 a processor or so. (The most expensive Intel processor I could find at Newegg was $1050.) This suggests you are wrong.
I can't. And as already pointed out, costs for large tech companies or datacenters are already dominated by such apparently trivial factors as energy costs - a 10x increase in raw processor price would be catastrophic.
I'm not sure this would apply if the 10x increase in price applies to everyone else as well. We wouldn't pay Google real money if there's Bing for free, but we would have to if there's no competition. edit: also for the energy cost, a: it's by no means trivial and b: only goes to show that if the CPUs get 10x more expensive it won't be suc...
In this essay I argue the following:
Full essay: http://www.gwern.net/Slowing%20Moore%27s%20Law