NYJC_H2_ECON_ESSAY_QN1

1. ‘ Sales of adult fiction in hardback had fallen by over 10%, while cheaper paperback by only 6%. The price people are willing to pay is falling, while hard- cover prices are climbing. The Association of American Publishers announced that the ”explosive growth” of e-books account for 13.6% of adult fiction market in America, with burgeoning e-books sales increasing by over 1000% in the last three years after the launch of the e-book reader.’ Adapted from: The Daily Telegraph August 2011 (a) Explain the likely reasons for the overwhelming increase in sales of e-books. [10] (b) With the aid of relevant concepts, analyse the impact of the e-book trend on the publishing and related industries. [15] Suggested answer (a) Explain the likely reasons for the overwhelming increase in sales of e-books. [10] Synopsis: To look into the different factors affecting the ‘overwhelming’ increase in sales’ of e-books. The sales of e-books is represented by an increase in the equilibrium quantity of e-books. These factors should be linked to increases in demand and supply of e-books. 1. Intro - Explain that increases in sales of e-books can be due to rising DD for e-books or rising SS of e-books. 2. Increase in sales could be due to increasing demand. Focus should be on the increasing equilibrium quantity (Draw and show). Factors responsible for this : - Change in taste and preference in favour of e-books: Explain the features of an e-book : An ebook is a book in electronic format. It is downloaded to a computer, PC, Mac, laptop, PDA or any other kind of computer, and is read on the screen. It can have numbered pages, table of contents, pictures and graphics, exactly like a printed book. Advantage of an e-book : easy storage, environmentally friendly, ability to show links for easy access to more information. - Increase in income - Increase in the price of traditional books (substitutes) - Fall in price of e-book readers as well as increase in availability of e- book readers (complements) on other devices such as handphones, etc 3. Increase in sales could be due to increasing supply Focus should be on the increasing equilibrium quantity (Draw and show). Factors responsible for this : - Lower cost of producing e-books due to improved technology - Increasing number of firms creating e-books due to high profits offered by ebooks 4. Increase in sales in e-books due to both rising demand and supply factors 5. Conclusion : E.g DD more responsible than supply, especially change in taste and preference L1 Answers shows some knowledge of concepts required with respect to DD and SS factor influencing sales. 1 – 4 L2 Answers that were focused on DD and/or SS factors of ebook but lacks reference to