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An economic good is scarce and transferable, and provides the consumer with utility - Leaving Cert Economics - Question 2 - 2014
Question 2
An economic good is scarce and transferable, and provides the consumer with utility. (i) Explain any two of the underlined terms. (ii) Is good health an economic go... show full transcript
Worked Solution & Example Answer:An economic good is scarce and transferable, and provides the consumer with utility - Leaving Cert Economics - Question 2 - 2014
Step 1
Explain any two of the underlined terms.
Answer
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Scarce: An economic good is considered scarce when there is less of the good available than is being demanded. This means that if demand remains high, and supply is low, individuals will not be willing to pay the price necessary to obtain it. Scarcity encourages consumers to make choices and prioritize their needs.
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Transferable: This term indicates that ownership of an economic good must be capable of being transferred from one person to another. It allows for the exchange and trade of goods in the economy, facilitating a functioning market.
Step 2
Is good health an economic good? Explain your answer.
Answer
Good health is generally not classified as an economic good because it is not transferable from one person to another. While health can be influenced by economic factors and access to resources, individual health cannot be sold or bought, making it a unique aspect of personal welfare rather than a traditional economic commodity.
Step 3
Explain the Law of Demand.
Answer
The Law of Demand states that as the price of a good increases, the quantity demanded for that good falls, holding all other factors constant. This relationship reflects consumer behavior, where higher prices typically discourage consumption while lower prices encourage it.
Step 4
State and explain two reasons why the demand curve for new cars might shift to the right.
Answer
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Availability of Offers from Motor Dealers: If car dealerships begin offering favorable terms such as low or zero interest rates, more consumers may be encouraged to purchase new cars, resulting in an increase in demand.
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Increased Consumer Confidence: If there is a surge in job security or economic growth, consumers may feel more financially secure. This confidence often leads to increased spending, thus shifting the demand curve for new cars to the right.
Step 5
Outline one economic advantage to society of increased use of electric cars.
Answer
One significant economic advantage of increased electric car usage is the reduced emissions and cleaner environment. Electric vehicles contribute less pollution compared to traditional gasoline-powered cars, which not only improves air quality but also reduces healthcare costs associated with pollution-related illnesses.
Step 6
State and explain one other measure the government could take to reduce alcohol consumption.
Answer
One effective measure the government could implement is increased penalties for underage drinking. By enforcing stricter laws and higher fines for individuals and establishments that supply alcohol to minors, the government can reduce access and thereby decrease overall consumption.
Step 7
Discuss two possible benefits to individuals if they reduce their alcohol consumption.
Answer
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Greater Disposable Income: By consuming less alcohol, individuals can significantly cut their spending, resulting in more disposable income that can be redirected towards savings or essential expenses.
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Healthier Lifestyle: Reduced alcohol intake is linked to numerous health benefits, such as lower risk of chronic diseases and improved physical fitness, leading to better overall well-being.
Step 8
Discuss two possible benefits to society if the consumption of alcohol falls.
Answer
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Reduced Strain on Healthcare Systems: A decrease in alcohol consumption can lead to fewer alcohol-related health issues, thus alleviating the burden on hospitals and healthcare providers, allowing resources to be allocated more effectively.
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Decreased Crime Rates: Lower alcohol consumption may also correlate with reduced incidences of alcohol-related crime such as violence and drunk driving, leading to safer communities and less strain on law enforcement.