Essay Example on Scarcity is where the demand for goods is where there are only a limited supply

Scarcity Scarcity is where the demand for goods is where there are only a limited supply of something and therefore it is scarce http www businessdictionary com definition scarcity html 1 Identify a minimum of two examples of a scarce resource 2 Oil oil is becoming scarcer and the prices of oil are increasing because of more scarce its becoming Scarcity of crops bad weather could have an effect on a farmers crops therefore have less crops which leads to scarcity Scarcity of water in Zimbabwe due to lack of rainfall this then effects their crops Zimbabwe has adequate transportation and electrical power networks although maintenance has been neglected over the years After land redistribution much of Zimbabwe s land and agricultural production decreased drastically Zimbabwe has one of Africa's highest literacy rates http examples yourdictionary com examples of scarcity html 3 Describe what is meant by the term opportunity cost Opportunity cost is something that you have to give up in order to get something else like choosing between ice cream shop you have to choose between rocky road and strawberry When you choose rocky road the opportunity cost is the enjoyment of the strawberry http www businessdictionary com definition opportunity cost html 4 Identify what the basic economic problem is for all countries Limited Resources Limited in physical quantity as in the case of land which has a finite quantity 1 Limited in use as in the case of labour and machinery which can only be used for one purpose at any one time 2 Limited in physical quantity as in the case of land which has a finite quantity http www economicsonline co uk Competitive_markets The_economic_problem html 5 Describe the choices facing an economy when faced with the basic economic problem 

7 http www heritage org index country zimbabwe UK Economy Population 65 64 Million GDP 2 619 trillion Unemployment 4 2 Inflation 2 9 Compared to Zimbabwe Economy Population 13 4 million GDP 28 1 billion Unemployment 9 3 Inflation 2 4 8 The price of the good or service Prices of related goods or services These are either products that are the same or similar Income of buyers Tastes or preferences of consumers 9 Supply is the quantity of a certain product that a producer is willing and able to supply into a market at a given price The increase in supply will lead to a rightward shift of the market equilibrium https staffwww fullcoll edu fchan Micro 1determinants_of_supply htm 10 Production cost Since most private companies goal is profit maximization Higher production cost will lower profit Factors affecting production cost are input prices wage rate government regulation and taxes Technology New technological improvements help reduce production cost and increase profit that means stimulate higher supply and faster production so can make more goods in faster time Number of sellers More sellers in the market increase the market supply more sellers and more consumer s means more sales and more profit Expectation for future prices If producers expect future price to be higher they will try to hold on to their inventories and offer the products to the buyers in the future Four things are now affecting the picture Demand is low because of weak economic activity increased efficiency and a growing switch away from oil to other fuels