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) (i) explain the difference between an economic and free good. [4]
(ii) Identify a free good from the passage [1]
d) Explain the relevance of opportunity cost for a travel firm in deciding how to use its resources. [6].

Answer 1

Comprehension answers

Explanation:

• Ans a) Scarcity refers to a situation where there are not enough resources to fulfill the unlimited wants of people. When there is an evidence of opportunity cost that showcases that indeed there are limited resources. In the passage when there is mention of switching from offering one holiday destination to the other, that showcases there is lack of resources to be able to offer both options.
• Ans b) The factors of production are land, labour, capital and enterprise(an entrepreneur who brings all of the factors together). So, the tourist guy would be labour, the island place where hotel would be for accommodation would be land, and assets like machinery, like the things in hotel for guests would be capital.

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Answer 2

Answer:

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