Further+notes+on+IGCSE+Market+mechanism+and+allocation+of+scarce+resources

  Playdisk Ltd produces children's CD Rom games, which are priced at £30 each and which run on personal computer. The demand for home PCs has increased by 20% over the last 2 years as computer prices have fallen by 10% and as unemployment has fallen. At the same time the demand for Playdisk's games has increased by 25%.  (a) Why has a fall in unemployment led to an increase in the demand for home PCs? [2]  (b) Calculate the price elasticity of demand for home PCs. [2]   (c) Name two factors, apart from those mentioned in the case study, which could cause a change in the demand for Playdisk's games. [4]
 * 1. Read the extract below before answering the questions which follow: **