Question

A German travel company considers its future

A German travel company decides to stop selling holidays in Italy and instead to offer holidays in a new
destination. This is the Maldives, a group of islands in the Indian Ocean, famous for their long hours of
sunshine and sandy beaches. Tourism is a fast growing industry. Not all families, however, are able to go
on holiday whether at home or abroad. Most of those who take holidays would like to have more
holiday breaks.
a. What evidence is there in the passage of scarcity? (3)
b. Using examples, identify three factors of production involved in providing holidays in the
Maldives.(6)
c. Explain the difference between an economic good and a free good.(4)
d. Identify a free good from the passage.(1)
e. Explain the relevance of opportunity cost for a travel firm in deciding how to use its
resources.(6)

Answer 1

A.)

Switching from one product to the other, by deciding to stop travels to Germany and turn to Maldives, this shows limited resources which is as a result of scarcity.

B.)

Factors of producton include Land, Labor, Capital and Entrepreneur

Capital : Includes machineries and equipment used in business. According to the passage, capital. Include is Aircarft.

Labor : Those who work for the travel company to ensure it performs

Entrepreneur : The owner or shareholders who put together land, labor and capital to make profit.

C.)

Economic goods refer to goods which are scarce and involves the principle of oppttuiyu cost. Economic goods are scarce in relation to its demand. Free good in the other hand aren't scare as they are natyrallyboccuribgb, abundant and accessible.

An example of free good is Sunshine.

E)

Opportunity cost is important in deciding which goods or product provides the best return based on on its investment or resources. This can be related to the travel company's switch from Germany to Maldives

Step-by-step explanation: