TUTORIAL 1 (WEEK 2)

Question 1
Describe the economic problem that leads to the economics studies (scarcity – limited resources,
unlimited wants).
Define scarcity and relate it to choice. Then explain the cost of making a choice (opportunity cost).
Can also provide examples in relation to scarcity, choice, and opportunity cost.

Question 2
The structure is determined by the 3 economic fundamental questions (refer to the relevant slide) – Due
to economic problem (mention what it is) that leads to what goods and services will be produced, how
these goods and services be produced, and who will receive the goods and services (roles of the
government and private firms).

(Any relevant answers within and outside the article can be accepted)
Free economy – Briefly explain 3 advantages in terms of (due to no/less government intervention &
intense competition):
- Motivation
- Efficiency,
- Innovation,
- Product quality
- Product varieties
- Decisions, and
- Any other acceptable answers.

Free economy – Briefly explain 3 disadvantages in terms of:

- The gap between the rich and poor
- Monopolies
- Which specific group is served (who?)
- Social welfare (types of products due to production freedom)
- Price stability (lacks government intervention)
- Social/public goods (production?)
- Externalities (due to profit motive and no government intervention), and
- Any other acceptable answers.

Command economy – Briefly explain 3 advantages in terms of (due to more government

intervention):
- Fairness/Equity
- Price stability
- Public goods
- Employment
- Supply of goods
- Social welfare/support, and
 - Any other acceptable answers.

Command economy – Briefly explain 3 disadvantages in terms of:

- Motivation (due to fairness/equity)
- Efficiency (due to price distortion)
- Competition
- Supply of goods (to what extent)
- Product quality
- Standard of living
- Freedom to choose
- Innovation/creativity, and
- Any other acceptable answers.

Question 3
a. The production of 400 glass jars each day.
b. Loss of skills at growing and harvesting corn.
c. Loss of quiet farm environment and clean air.

Question 4
a. The drop in her grade of ten percentage points.
b. To play the third hour of game - MB > MC of the second hour.
c. Weigh the MB and MC (MB > MC - rational).
d. Yes, due to comparing marginal benefit and marginal cost of one more hour of game.

Question 5
Media Review

Question 1
Water scarcity - unlimited wants exceeds the limited resources available to fulfill those wants.
Water falls under “land” – a natural resource.
Any 3 reasons from the article – describe demand, management, and weather-related conditions.

Question 2
Yes, explain scarcity of water resource for its usage (provide a few examples – e.g., drinking). Relate
this scarcity to choices and opportunity cost (explain via the examples).

Question 3
(Any relevant answers within and outside the article can be accepted)
 Water saving
 Awareness of usage level and adaptation measures
 Recycling
 Agriculture/industrial efficiency
 Government policies - example