Hard+disk+and+camera+makers+hit+by+Thai+floods+by+Woo+Chang

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT: Hard disk and camera makers hit by Thai flood=

=SOURCE: http://www.bbc.co.uk/news/technology-15534614=

=DATE EXTRACT WAS WRITTEN: November 1, 2011=

=DATE CURRENT EVENT WAS WRITTEN: March 26, 2012=

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= According to the article, the supply of the hard disks decreased due to damages to the factories in Thailand from floods. Due to this natural disaster, the factors of the production for hard disks were severely damaged. In particular, two of the four factors of production, capital and labor were damaged; many hard disk factories including machines inside were inundated by the floodwater and factory workers, who are laborers for the hard disk firms, were badly injured. Since there are damages to the capital and land, there is a sharp fall in the quantity of factors of production for hard disks. Consequently, the PPC (Production Possibility Curve) for firms that use hard disks for production shifts inward; thus, firms can no longer produce the quantity that they originally produced. Moreover, as the supply of the hard disks decrease, the supply curve shifted left, decreasing quantity supplied and demanded and increasing the price. In addition, as supply shifted left, the quantity demanded for P1 is greater than the quantity supplied for P1. As a result, there is a shortage or excess demand for hard disks. As the price of the hard disks rose, other firms that produce their electronic devices with hard disks have higher cost of production. Since cost of production is one of the non-price determinants of the supply curve, as the cost of production rise, the supply curve for electronic firms would also shift left, decreasing quantity supplied and demanded and increasing the price. Therefore, the flood not only affects the hard disk market, but also influences other electronic device markets in which the hard disks are key for production.

=VOCABULARY TERMS AND DEFINITIONS:= = = =DIAGRAMS:=
 * Supply: the amount of a good or service that the producers are willing and able to produce.
 * Demand: the amount of a good or service that the consumers are willing and able to purchase.
 * Factors of Production: inputs or resources that go into the production of goods or services and they include land, labor, capital, and entrepreneurship.
 * PPC (Production Possibility Curve): A curve that shows the maximum combinations of goods and services that can be produced by an economy in a given time period, if all the resources in the economy are being used fully and efficiently and the state of technology is fixed.
 * Shortage (Excess Demand): A situation occurs when the price of a good is lower than the equilibrium price such that the quantity demanded is greater than quantity supplied.

Due to the flood, there is a fall in the quantity of factors of production, which leads the PPC to shift inward.
 * Figure 1: PPC of Samsung (Desktop & Camera)**

There are damages to the factors of production so supply decreases, moving the supply curve to the left. The supply curve shifting left increases the price from P1 to P2. There is a shortage (excess demand) Q1(quantity demanded) is greater and Q3(quantity supplied).
 * Figure 2: Supply and Demand Curve for Hard Disk Market**

=EVALUATION:= As the price of the hard disks rose, many people would think that this only adds harm. In fact, there are both good and bad sides of this situation. In short term, this could be a bad situation for the consumers because they have to pay greater amount of money for hard disks than the original price for hard disks. Plus, as the price of hard disks rose, the price of goods that rely on the hard disks would also rise, which is also a bad thing for consumers. However, in the long term, this can turn in to a good thing. As the consumers are not pleased with the high prices of hard disks, the hard disk firms would then try to develop a new technology that will make their hard disks more memory-efficient and more durable. In the future, the firms will catch up with the supply and apply the new technology to the hard disks and this could be a good thing for consumers because they can use hard disks with higher quality with about the same price. In the hard disk market, the massive winners in the short run are hard disk firms that do not have factories in Thailand because they can charge higher prices for their hard disks without any increase in the cost of the production. I think although it might be a loss in the short term, it is a benefit in the long run for economy in general because it helps prepare other firms for abrupt natural disasters and motivates firms to develop new technologies.