Sample Essay on topic of Demand-Supply a) Explain the factors affecting the price of MacBook.

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Prepared by: Khoo H K

Price of MacBook is determined by the market forces of demand and supply. It can be affected by several demand factors such as consumers income level, expectations of future price, and supply factors such as cost of producing MacBook, etc. One demand factor affecting the price of MacBook is consumers income. Given that MacBook is a normal good, rise in consumers income will result in rise in demand for MacBook, ceteris paribus. With greater purchasing power, consumers are more willing and able to pay a higher price to consume MacBooks at each and every quantity level, as illustrated by a rightward shift in market demand curve from D0 to D1 in figure 1. This can be seen as in 2007 economic boom, the general rise in income level was accompanied by a rise in price of MacBook and its quantity sold. Another demand factor is consumers expectation of future price. Given that MacBook is a durable good, its demand will rise when consumers expect its price to rise in the future, ceteris paribus, as consumers may bring forward their future purchase plans and choose to buy at the lower current price. For example, we tend to observe a rise in demand for MacBook during IT Fairs in Singapore, when consumers expect prices to rise when the promotion is over. This way, they are able to purchase more goods and services for greater satisfaction. We can thus observe a rightward shift in market demand curve from D0 to D1 in figure 1. Rising cost of production can cause a fall in supply of MacBook and rise in price. In 2007, there was a worldwide surge in oil prices, leading to higher transportation costs for many goods, including MacBook. Price of MacBook thus rises correspondingly. As higher oil prices cause higher payment for its factor inputs, , the minimum price that Apple is willing and able to produce at for each and every quantity rises as well, causing an leftward shift in supply curve of MacBook from S0 to S1 in figure 1.

Sample Essay on topic of Demand-Supply

Prepared by: Khoo H K

The rise in demand and fall in supply result in a shortage of Q1Q2 at the original price P0, where quantity demanded exceeds quantity supplied. To get rid of the shortage, consumers will offer higher prices to obtain the goods, pushing the price up. As price of MacBook rises, producers are now more willing and able to supply larger quantities; whereas consumers will demand less quantity of MacBook, ceteris paribus. The simultaneous rise in quantity supplied and fall in quantity demanded thus reduce the shortage. Price continues to rise until new equilibrium price P1, where shortage is eradicated, pressure on price to rise is thus lifted. In conclusion, we can see that the changes in various demand and supply factors can affect price of a good, in this case, causing a rise in price of MacBook.

Mr Khoos note to students: 1. Please be reminded that THIS IS your typical part (a) 10-mark essay that you are supposed to write in 18 minutes, with such required depth and number of points. In Alevels youd need to write 3 x 25-marks essays in 45 mins each. Sounds impossible? But it is achievable. Hundreds of your seniors have done it. With practice, so can you. 2. Reading this model essay alone might give you the content knowledge, but it definitely wont help you improve your writing skills (which include speed) and time management. So now, as a good practice for your upcoming Essay Test (and future examinations), spend 18 minutes now to literally write out this essay on paper. This would give you a good feel of how fast you should write under exam conditions (excluding thinking and planning time). 3. Dear students, your teachers can teach you the necessary contents and techniques, but ultimately it is up to you to master the techniques and call it skills of your own. Learning is a two-sided effort. Lets work hard together.

Skills required in answering essay question 1. 2. 3. 4. 5. Content Mastery Thinking skills Writing skills Time Management Anxiety Control