Hence, trade wars will ultimately create a domino’s effect that harm global economy as a whole, which can lead to the next global economic crisis. The output of economy will next be impacted, and so on. Increasing unemployment rate affects the purchasing power of households. Many manufacturers without insufficient resources may be hit devastatingly and forced to go bankrupts. The price rises of many products will boost inflation rate in multiple countries. Regardless of the manufacturer’s actions, the global economic turmoil may be nearer than you think. On the other hand, maintain price may not sufficient to cover up production costs. The next question, nonetheless, how about other products that are highly dependable on global supply chain? On one hand, raise price will deteriorate competitiveness. Hence, consumers will not experience soar in selling price of an already extremely expensive smartphones anytime soon. Luckily manufacturers have been selling smartphones way above theirs production costs and thus willing to sacrifice some of margins to keep market share. Manufacturers may response to the increase of production cost by either increase selling price to maintain margin, or maintain selling price to keep market share. However, many elements required to make smartphones are still need to be imported from other countries, as has been discussed, and consequently will still increase the cost of production. Some manufacturers may be considering to open up factories in the United States to avoid import tariff. Smartphone manufacturers are charged with tax tariff of importing final product of smartphones from China to the United States. Trade wars affect the global supply chain of smartphone industry. Fun Facts: These elements are called “rare-earth elements” not because of its rarity, but due to the complexity of mining the elements without causing the reaction of toxic and other hazardous elements. And many other key elements, also known as “rare-earth elements” are around 84.8 percent produced in China. Another crucial element is cobalt which supply is dominated by the Democratic Republic of Congo, an extremely unstable country due to its human rights abuse, with the 58.2 percent of global market share. Lithium, the main element to create battery, is only produced in certain countries, including Brazil, Argentina, Chile, China, and Australia where Chile used to be the largest producer of lithium until recently being taken over by Australia. Around 0.030 grams of gold is used in each iPhone. Seventy-five (75) out of one-hundred-and-thirteen (113) elements in the “periodic table of elements” are the key elements to produce smartphones. The demand of smartphones has reached its highest level, and at this point, manufacturers are critically under pressure, thanks to the economic and political tensions, of supplying necessary key raw materials and components to make smartphones from different parts of the world and meet demand. You can be creative as long as it relates to a determinant of demand.By 2019, a third of world population or around 2.5 billion people will use smartphone. Again, use an ORIGINAL example (not examples discussed in presentations or on other worksheets). Write YOUR OWN ORIGINAL scenario for each determinant of demand that would cause an DECREASE in demand. Title this page "Decrease in Demand."Ĥ) On the back of that paper, write down each of the determinants of demand, leaving space underneath each determinant. Be sure to label the y-axis as "price" and the x-axis as "quantity." Draw arrows to show the shift from the first demand curve (D1) and the second demand curve (D2). You can be creative as long as it relates to a determinant of demand.ģ) On a different piece of paper, draw a decrease in demand graph (shifting the demand graph to the left). Write YOUR OWN ORIGINAL scenario for each determinant of demand that would cause an INCREASE in demand. Title this page "Increase in Demand."Ģ) On the back of that paper, write down each of the determinants of demand, leaving space underneath each determinant. 1) On a piece of paper, draw an increase in demand on a demand graph (shifting the demand graph to the right).
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