Explain how the increasing use of drones is likely to affect the market for delivery workers

AQA AS-Level Economics Paper 1 June 2023 Insert

Extract E (lines 8–9) states: ‘Drones can reach remote areas quickly and easily, saving on labour and other costs.’ Explain how the increasing use of drones is likely to affect the market for delivery workers. (June 2023)

1. a market is a place where buyers and sellers meet to exchange goods and services.
2. a drone is an example of creative disruptive, as it is an innovation that causes a disruption in another market.
3. the extract mentions that 'drones are increasingly being used to deliver goods' and that firms can consider 'saving on labour and other costs'
4. a sudden increase in supply of drones would affect the market for delivery workers as they are both in competitive demand with each other.
5. drones and delivery workers are substitutes therefore they would have a positive cross elasticity of demand.
6. an increase in the availability of drones would cause an increase in supply and thereofore a fall in price for drones.
7. this means that firms would have less need for delivery workers.
8. demand is the number of delivery workers that firms are willing and able to employ at each wage rate.
9. demand for delivery workers would shift to the left.
10. this leads to a fall in the equilibrium quantity of delivery workers and a fall in their equilibrium wage rate.

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