That alone isn't enough. Don't forget that you will sell more of them at $500 per gadget, so the total revenue from gadgets may go up. But it is possible, and

That alone isn't enough. Don't forget that you will sell more of them at $500 per gadget, so the total revenue from gadgets may go up. But it is possible, and does happen, that technological change messes up GDP measurement. It was definitely a metric formulated without changes in the production process or even consumption process in mind.