Oil is considered an 'economic good' because it is scarce, transferable and provides utility - Leaving Cert Economics - Question 2(a) - 2008
Question 2(a)
Oil is considered an 'economic good' because it is scarce, transferable and provides utility.
(i) Explain each of the underlined terms.
(ii) State one example of a... show full transcript
Worked Solution & Example Answer:Oil is considered an 'economic good' because it is scarce, transferable and provides utility - Leaving Cert Economics - Question 2(a) - 2008
Step 1
Explain 'scarce'
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Answer
Scarcity refers to the limited availability of a resource in comparison to the demand for it. An economic good like oil is considered scarce since there is less of it available than people are willing to buy, thus requiring consumers to pay a price to obtain it.
Step 2
Explain 'transferable'
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Answer
Transferability means that ownership of a good can be transferred from one person to another. For a good to be economic, it should be possible to sell or give it away, ensuring that the good can change hands in the market.
Step 3
Explain 'utility'
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Utility refers to the satisfaction or benefit that a consumer derives from a good. For a commodity to be classified as an economic good, it must provide some level of utility to the consumer, enhancing their overall satisfaction.
Step 4
State one example of a 'free good'. Explain your answer.
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An example of a free good is air. Air is abundant and does not come with a price because it is not scarce; therefore, people do not need to pay for it. Its plentiful supply means that it does not command a price in the market.
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