What is the basic economic problem

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Question 1

(a) What is the basic economic problem? What is an example of a scarce item for a household, a firm and a society?

(b) What are the four factors of productions? Please also mention their rewards.

(c) Use a demand and supply diagram to illustrate how each of the following events affects the equilibrium price and quantity of pizza.

(i) The price of mozzarella cheese rises.

(ii) The health hazards of hamburgers are widely publicized.

(iii) The price of tomato sauce falls, but at the same time the incomes of consumers rise and pizza is an inferior good.

(d) Electric car manufacturers are increasing their use of robotics, which has the potential to increase manufacturing production. Does this cause an increase in supply or an increase in the quantity supplied of electric cars? Also, does this cause an increase in demand or an increase in the quantity demanded of electric cars? Explain.

Reference no: EM133128289

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