Question

For each of the following resources, name at least two (hypothetical) competing potential uses for that resource. Then for each describe how the “market” determines to which use it will be allocated.

Question 1 - A parcel of vacant land located at the intersection of two streets used heavily by commuters

Answer 1

Question 1 - A parcel of vacant land located at the intersection of two streets used heavily by commuters

The parcel of vacant land could be used for building a house for domestic purposes: to be inhabited by a family or any other group of people, or it could also be used for building a commercial property (for example, a convenience shop).

Because the parcel is located at an intersection where there are many commuters, the market will likely determine that a commercial property would be more profitable, since many commuters means many potential customers.

A house, on the other hand, could not be as profitable, because people tend to dislike living in places where there are many people around.