The nature of the economic problem

To lower the price of oil, extra supplies are required. Yet in 2013, objectors resisted efforts to search for new sites because they were concerned about the environmental harm that such exploration might create. How does this demonstrate the basic economic problem?

May/June 2015

What does the basic economic problem refer to?

May/June 2015

In 2013, an earthquake on the Iran/Pakistan border wrecked many factories and homes. Some officials believed the Governments ought to rebuild the factories and homes, even though this would involve an opportunity cost. Others suggested that some people should be encouraged to emigrate.

May/June 2015

Which option best illustrates the existence of the economic problem?

May/June 2016

Bank deposits in Dubai increased by 40% in 2013. An increasing number of financial firms are setting up in Dubai. Expansion in the financial sector is being matched by horizontal mergers among financial companies, and workers are becoming more specialised. The economy is becoming wealthier, yet the economic problem will never be solved in Dubai or anywhere else in the world.

May/June 2016

Each country must decide how to allocate its scarce resources. Several countries are assigning a greater share of their resources to tourism. However, some jobs in the industry are low-paid and provide little employment security. The average age of workers employed, for instance, in hotels is fairly young, even though some older workers have spent their working life in the hotel industry.

May/June 2016

Which combination of terms provides the general definition of the economic problem?

May/June 2017

What causes the economic problem that all countries face?

May/June 2018

In economics, natural sunlight is regarded as a free good. Why is this the case?

May/June 2018

Give one example of a free good.

May/June 2022

Governments in low-income countries often permit foreign multinational companies (MNCs) to extract minerals within their territory. What possible conflict between the benefit and the cost could this create for low-income countries?

May/June 2022

What causes scarcity in an economy?

May/June 2023

What forms one element of the economic definition of scarcity?

May/June 2023

What does the term free good mean?

May/June 2024

Why must scarcity always be present?

May/June 2024

Mexico, Indonesia, Nigeria and Turkey, collectively called the Mints, are four emerging economies forecast to expand quickly. In 2014, the four nations had fairly large populations, ranging from 75 million in Turkey to 242 million in Indonesia. Their birth rates were also high, from 17 in Turkey to 41.5 in Nigeria per 1000 people. Both income per head and the countries’ Human Development Index ranking are getting better. However, these changes do not mean that everyone in the four countries is content. As incomes rise, so do people’s wants, and what people would like to consume is greater than the maximum output that countries are able to produce. Output and consumption are rising in each of the four countries. Nigeria, for instance, is expected to become one of the world’s 20 largest economies by 2020. Productivity is increasing in most sectors of the Nigerian economy although it is still low in agriculture. Even with some security worries, more multinational companies are establishing themselves in the country because they are attracted by its expanding markets. Nigeria and Turkey both recorded annual inflation rates above 8% in 2014. Indonesia’s rate was 5.7% and Mexico’s 5.2%. In that year, the Mexican Government had used monetary policy measures to hold inflation down. In August 2014 it opened up its energy market, allowing private sector firms to compete with the country’s state-owned petroleum firm. It also raised spending on state-provided health care, which runs alongside private medical care. The four countries experienced exchange-rate movements in 2014. Indonesia’s currency, the rupiah, moved from 10\thinspace685 per US$ in the previous year to 11\thinspace450 per US$ in 2014. Turkey’s currency, the Turkish Lira, showed a similar pattern. Movements in the exchange rate can influence firms’ production costs, as can industrial action. In June 2014 Turkish trade unions organised several strikes in an attempt to secure better wages and working conditions for their members. However, Turkish trade unions have limited power because of restrictive trade union legislation and a low membership level, with only 9% of workers belonging to trade unions. This means that collective bargaining is not a major feature of Turkish labour markets and Turkish trade unions do not have much impact on economic policy.

Oct/Nov 2016

What do economies seek to accomplish when dealing with the economic problem of scarcity?

Oct/Nov 2018

What is used to identify a finite resource?

Oct/Nov 2019

Why do economic agents make choices?

Oct/Nov 2020

Why must consumers decide how to spend their income?

Oct/Nov 2020

To bring down the price of oil, extra supplies must be found. However, those who object are against exploring new locations because of the environmental harm this could lead to. Explain why this statement illustrates the basic economic problem?

Oct/Nov 2021

Helium is a gas in short supply because it takes thousands of years to form. The US government owns $35\%$ of the world’s helium supply and has been selling its stocks. Helium is needed in medical scanners. It is also used for party balloons, which is an inefficient alternative use of a valuable good. Which two concepts apply to this statement?

Oct/Nov 2021

In order to bring down the price of oil, more supplies are required. Yet those who object oppose exploring new sites because of the environmental damage that could result. Why does this statement illustrate the basic economic problem?

Oct/Nov 2021

Helium is a gas whose supply is restricted because its formation takes thousands of years. The US government owns $35\%$ of the global supply of helium and has been selling its reserves. Helium is vital in medical scanners. It is also used in party balloons, which is an inefficient alternative use of a valuable good. Which two concepts apply to this statement?

Oct/Nov 2021

A small country, with oil as its sole export, chooses to cut the speed at which it removes its finite oil reserves quite substantially. What is the most likely explanation for this choice?

Oct/Nov 2023

Which economic question is the least likely to emerge due to scarcity?

Oct/Nov 2024

What is the reason for the economic problem affecting the worldwide market for gold?

Oct/Nov 2024