Price determination & market equilibrium

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.

Examine two factors which might influence the supply of labour in the electronics industry.

Assess whether firms in the electronics industry benefit from economies of scale.

Discuss the likely concerns of the competition authorities regarding the proposed merger of the two companies referred to in Extract C.

With reference to Extract D, discuss possible methods of government intervention to reduce electronic waste.

Disney+ is a streaming service that distributes films and television series produced by the Walt Disney Studios.

(Source adapted from: https://www.businessofapps.com/data/disney-plus-statistics/)

Ceteris paribus, the most likely consequence of the above data is that Disney+ will experience an increase in its:

Draw a supply and demand diagram to show the likely effect of the change in the number of subscribers on the market equilibrium for Disney+ services.

Cobalt is a key metal used in the batteries of electric cars. China is the world’s largest producer of electric cars but has recently cut subsidies to its manufacturers.

The Democratic Republic of the Congo (DRC) produces more than 60% of the world’s supply of cobalt, from its small-scale mines. Many new small mines opened in 2018 as a result of improved expectations of profit.

The following graph shows the price of cobalt between June 2018 and June 2019.

With reference to the information provided, draw a supply and demand diagram to show why the price of cobalt fell between June 2018 and June 2019.

Between June 2018 and June 2019 the price of cobalt fell by:

In August 2017 Hurricane Harvey caused the closure of nearly a quarter of the oil production capacity in the United States.

Draw a supply and demand diagram to show the likely microeconomic effects of the hurricane on the US oil market.

The average fee charged by high-street estate agents to homeowners for selling property is 1.3% of the final sale price.

(Source: http://www.which.co.uk/money/mortgages-and-property/home-movers/guides/selling-a-house/estate-agent-fees-and-contracts)

Assume the selling fee is 1.3%. Calculate the payment received by an estate agent on a property sold for £489 000. You are advised to show your working.

In August 2016 the Office for National Statistics reported that the average house price in London was £489 000, whereas in the North East of England it was £127 000.

The ratio of the average house price in London to the average house price in the North East of England is:

Explain one likely reason for the difference in average house prices between London and the North East of England.

With reference to Figure 1, explain one likely reason for the overall trend in the real price of gas and electricity.

With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market.

With reference to Extract B, assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market.

The price elasticity of demand for electricity in the UK is estimated to be –0.35 in the short run and –0.85 in the long run.

With reference to Extract A and your own knowledge, examine two possible reasons for the change in price elasticity of demand for electricity over time.

With reference to Extract C and your own knowledge, discuss policies businesses and government might implement to reduce labour immobility to benefit the energy sector.

The table shows market data for e-cigarette kits. The original equilibrium price is £23.

As a result of a successful advertising campaign, demand increased by 3 000 e-cigarette kits at all prices. At the same time production costs fell leading to an increase in supply of 1 000 e-cigarette kits at all prices.

Calculate the new equilibrium price and quantity following the successful advertising campaign and the fall in production costs. Use the last two columns for your working.

Research conducted in New Zealand in 2014 estimated the cross elasticity of demand for e-cigarettes to be 0.16 in response to changes in the price of tobacco. This implies that a 5% increase in the price of tobacco will cause the percentage change in demand for e-cigarettes to be:

C 0.8