Answer ONE question in SECTION B
Where questions are sub-divided i.e. a),b) etc., all parts must be answered.
B1. Thailand is the world’s second-largest producer of Hard Drives after China. In 2011, there were severe floods in Thailand. Because the hard drive manufacturing factories had to shut down due to the flood, the cost of hard drives increased significantly.
- Draw and discuss a supply and demand diagram to explain the increase in hard drive prices.
(10 marks)
- Is a computer and a hard drive a substitute or a complementary product? Explain.
(6 marks)
- What do you think the impact of this flood has been on the equilibrium price and quantity of computers? Draw a supply and demand diagram for the computer market to explain your answer.
(10 marks)
- Explain how the following factors will affect the demand curve for computers in an economy.
- Commercial banks raise the interest rate on loans.
- An increase in immigration results in a large increase in population in the economy.
- An increase in the income of people in the economy.
(12 marks)
- Explain how the following factors will affect the supply curve for computers.
- An increase in the working age population of a country.
- A restriction on the inflow of foreign labour employed in the computer industry.
- More companies are producing computers.
(12 marks)
