Text A, Paragraph 1
In response to global demand for microchips, Taiwan’s semiconductor industry is allocating more resources towards production. Despite efforts, the market often experiences periods of disequilibrium due to fluctuating global demand.
Define the term disequilibrium as indicated in bold (Text A, Paragraph 1).
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Text B, Paragraph 2
The housing market in the UK has seen rapid changes in recent years. Housing supply has been unable to keep pace with increasing demand, creating shortages and pushing prices upward.
Outline one possible cause of excess demand in the housing market (Text B, Paragraph 2).
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Text C, Paragraph 1
In Brazil, fluctuations in the coffee industry have led to periods of surplus as supply outpaces demand. This surplus has affected the income of farmers and placed pressure on an industry that is already struggling to survive
Draw a diagram to show the effect of excess supply in the coffee market in Brazil.
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Text F, Paragraph 2
In response to drought conditions in California, the price of water has risen sharply, acting as a rationing mechanism. The effect has been more dramatically felt in lower income households.
Define the term rationing as indicated in bold in (Text F, Paragraph 2).
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Text A, Paragraph 2
In the UK, the price of electric vehicles has risen due to growing demand. This price increase is causing producers to allocate more resources to electric vehicle production.
Draw a diagram showing how the price mechanism allocates resources in response to increased demand for electric vehicles.
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Text C, Paragraph 3
In Vietnam, increased improvements to technology in rice production have led to a higher producer surplus for the farmers. This has led to an improvement in their quality of life.
Define the concept of producer surplus indicated in bold in the Vietnamese rice market (Text C, Paragraph 3).
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Text E, Paragraph 3
In Australia, the introduction of a subsidy for electric car producers has increased the supply, reducing prices and increasing the consumer and producer surplus.
Draw a diagram showing the impact of the subsidy on consumer and producer surplus.
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Text B, Paragraph 3
The South African wine market has experienced an unexpected decrease in demand following a decline in exports to Europe. Local vineyards report a surplus of unsold bottles, particularly for premium wines that previously sold well abroad. To avoid potential waste, some vineyards are considering price adjustments.
Using a demand and supply diagram, explain how excess supply could affect the wine market in South Africa.
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Text C, Paragraph 1
Due to the increasing popularity of oat milk in the UK, oat farmers have seen higher prices for their crops. This rise in prices has caused farmers to consider switching from traditional grains to oats. As more resources are allocated to oat production, industry experts are discussing the broader implications of this change in supply in the coming years.
Using a demand and supply diagram, explain how the price mechanism might affect resource allocation in the UK oat market.
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Text D, Paragraph 2
In France, the price of cheese has changed due to a surplus in the dairy industry. As prices alter, consumers are incentivised to buy more cheese. Meanwhile, dairy farmers are reassessing their production levels to avoid potential losses.
Using a demand and supply diagram, explain how the price mechanism could affect the cheese market in France.
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Text E, Paragraph 1
The Italian coffee market has been growing, with new local cafes opening to meet the high demand. Many consumers enjoy the coffee quality in Italy and are often willing to pay more for premium blends. Coffee producers report changes in revenues affecting both consumer and producer surplus.
Using a demand and supply diagram, explain how rising demand in the coffee market might affect consumer and producer surplus in Italy.
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