Question

• Explain the price levels in China's economy and state the current level of inflation.
• In Task 2, you identified a product which was plentiful in supply (we have identified mobile phones). If there was an increase in production costs for this product or service, what would happen to its supply? Briefly describe this type of inflation.

Answer 1

China rapid growth largely depends on two things that are large capital investment and the large productivity increases, so it helps China to improve the economic growth and facilitate more efficiency to the economy. A large number of production at lower cost and implementation of new technologies and techniques for rise in production provides an effective economy.

The Inflation level of China increase recently and reach to 2.9 percent in 2020. China have control over of its inflation which gives an effective and efficient running of an economy.

TASK-2

If there is an increase in production costs for mobile phones, so its demand leads to be left shifts and effects the supply of mobile phone to an excess of supply in the market. The excess supply of Mobile phones indicates low demand and prices may fall in future of mobile phones because a consumer not prefer a expensive mobile phone.

Thus, Increase in production cost of Mobile phones makes it more expensive and costly and as a result a consumer may postpone its consumption of mobile phone so the supply of its in excess in the market.