Use demand schedules, diagrams and market contexts to combine individual demand, trace extensions or contractions and explain shifts caused by income, tastes or related goods.
The diagram shows the demand curve for a good.
What can be concluded about a single downward-sloping demand curve?
consumers increase demand when their incomes rise
consumers plan to buy less when prices rise
firms produce less as prices rise
firms sell more when prices rise
In 2020, the price of gold fell in Vietnam. That year, Vietnam was one of Asia's best performing economies. Unlike some Asian economies, Vietnam did not experience a recession. Its total output, exports and imports all increased. Unemployment did increase from 2.0% to 2.3% but remained very low. One of the aims of fiscal policy can be to achieve full employment.
Identify how the effect of a fall in the price of gold would be shown on a demand curve for gold.
Read the source material carefully before answering Question 1.
Source material: Istanbul's geographical advantage
Istanbul is Turkey's largest city by population size. In 2014, its population was approximately 14 times more than it was in 1955. This could be due to increased migration from rural areas to cities and improved healthcare. Istanbul also has the highest output per head of all regions in Turkey.
Good transport links have contributed to Istanbul's economic growth. In addition to good land transport, Istanbul is also home to the largest airport in the world, measured by passenger numbers. From Istanbul, there is access to a market of trillion with 1.5 billion people within a flight time of 4 hours. In addition to affordable international air travel to and from Istanbul, domestic air travel is also very affordable. This is most likely due to economies of scale. There is also a high level of competition in this industry which influences prices and quality of service. The growth in transport industries, along with growth of financial services, has contributed greatly to Istanbul's growth rate as shown in Table 1.1.
Table 1.1 The percentage growth of Istanbul's service sector and the percentage growth of Istanbul's total output 2010-2014
Foreign investment is flowing into Istanbul. Multinational companies (MNCs) are finding Istanbul an attractive city to invest in because of the low cost of living. These MNCs are affecting employment, the level of technology and wages in Istanbul.
However, there is worry that such confidence in the Turkish economy may not last. Many companies have depended on borrowing for expansion. Increased interest rates around the world may make it harder for such companies to continue borrowing and also to attract new customers. If there are greater worries about safety for tourists in Turkey in the future, this may cause fewer people to book flights to Turkey.
Draw a demand and supply diagram to show the effects on flights to Turkey of greater worries about safety for tourists.
