2023 ACJC H2 Price Mechanism Tutorial

©Property of ACJC Economics Dept/2022/Price Mechanism 1 ANGLO-CHINESE JUNIOR COLLEGE JC1 Economics H2 PRICE MECHANISM & ITS APPLICATION Tutorial Worksheet 2 Question 1: Market for bubble tea in Singapore With the aid of a diagram, explain the effects of the following events on the market for bubble tea in Singapore: a) Increase in workers’ productivity after attending training courses b) Increased spending on advertisements by bubble tea shops c) Singapore experiencing negative economic growth and a higher Goods and Services Tax Question 2: Supermarkets offer drivers higher pay amidst shortage UK’s 3 largest supermarkets, Asda, Tesco and Sainsbury’s reported increased delivery costs after having to raise wages of their driver. Big supermarket chains, desperate to ensure their food products such as ice -cream, salad and canned drinks get to their stores, these supermarkets are offering drivers of heavy goods vehicles (HGV) nearly double the market rate. Industry insiders say HGV drivers’ wages have already risen by between 10% and 20% as a result of the shortage HGV drivers. Logistics UK, which represents freight owners including supermarkets, has estimated a shortage of 90,000 HGV drivers. It can take more than six months to train a new HGV driver. A surge in demand for home delivery during the pandemic has offered a whole range of alternative employment for drivers, especially for drivers capable of driving long -distances in HGVs. The situation is exacerbated by EU workers leaving the UK following Brexit. Source: The Guardian, 27 July 2021 a) Using demand and supply diagram, account for the increase in UK’s HGV drivers’ wages. b) Do you think it is possible for the earnings of the Grab driver or food delivery rider to increase as high as that of the HGV driver? Explain your reason. c) Consider the effect of the increase in drivers’ wage on prices of supermarkets’ food items. Section A: Discussion Questions

©Property of ACJC Economics Dept/2022/Price Mechanism 2 Question 3: Apple and Huawei’s brand image Apple has perfected the art of pushing up the price of its flagship phones, but without any significant impact on demand. However, the best thing for Apple is that, with this strategy, even a drop in volumes will ensure high revenue. Its success comes from its understanding that smartphones are the most essential commodity for a lot of its users. These customers will buy it at a higher price as they are convinced of the value it brings to them. In recent years, Apple has also developed a range of products — like Apple Arcade, Apple Music, AirPods, and the Apple Watch. The iPhone serves as a catalyst to lure people into its ecosystem and keep them hooked for whatever may be next. Huawei’s new flagship smartphone shows it has the technological know-how to compete with the best Apple and Samsung products on the market but to really take on the top two it needs to work o