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nomad said:

 Because that doesn't make sense to me, if that is so, then 720p displays should cost more than 1080p of the same size.  

Are you talking about televisions here? This is a false conclusion, if so. A television is much more than its screen, and has other features involved. Furthermore, since total demand is less for 720p televisions, regardless of whether production costs are higher or less the sale price will be less (see: Microeconomics demand curve shifts downward, decreasing equillibrium price.) That is why fewer 720p displays are being produced than say in 2006. The opportunity cost exceeds any manufacturing costs involved. 

Anyway, 720p screens are still quite popular in the mobile market, so their prices won't increase. 480p is an entirely different matter. If Nintendo wants a certain type of screen, with a certain size, at a certain DPI they're going to have to find a manufacturer who will produce it. And if the manufacturer isn't already producing screens similar to this, the costs will be higher than if Nintendo chose to work with the screens that are being produced.