6 (a) With reference to Extract A, explain the likely reasons for the
change in price of electronic devices. Include a supply and demand
diagram in your answer. (5)
One likely reason to would be due to the increase in price of computer
chips "from $0.20 to more than $1" Computer chips and electronic
devices are complementary goods, which means they have a negative
xED. The responsiveness of quality demonded for electronic devices
would decrease if price of computer chips increase. This is because
production cost now increase, shifting supply earve from S1 to S.
Another reason would be increase in demand due to growing popularity
of home entertainmend.As seen, demand now shft out increasing price
fron Pe to p'
, b) Examine two factors which might influence the supply of labour in the
electronics industry.
One factor that influence the supply labour electronics industry is
occupational immobility. The nature of industry is becoming increasing
techical" This means workers will need higher skill in order to be hired.
People would need to have a certain educational level , and due to
information gaps, students in university In the may not know there's such
a huge demand electronics industry thus they pick up other subjects like
medicine to study.
Ahother factor would be demographic factors. Extract B ”every year,
employees in the electronies industry retire.” This means there's a shift in
Supply of rabour from S2 to S1. With such a huge turnover every year,
there would be less and less supply of (abour.
However this may not be the case in the long run. The current right
labour market may alert governmen to intervene. This, providing more
appretiance scheme to allow students or workers gain the still needed to
specialise in this indutry, causing PES to be more elastic
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