Essay about Economic Fundamentals

Submitted By hol10216003
Words: 2203
Pages: 9

Assessment 1
Product Possibility Frontier

Table Of Contents

Abstract – A two-product Market 2

Introduction 2

Product 1 – Bottle of Wine Resources 2 Avalability and efficiency over 100years 4 & 5

Product 2 – A Tour of the wine Regions of France
Resource 3 Avalability and efficiency over 100years 6

Explanation of Efficency 7

Conclusion and Findings 8 & 9

References 10

Abstract - A Two-Product Market
Both products are considered scarce in relation to their demand[Webfinance 2012]. This level of scarcity, as explained by Riley[2006], can vary based on the efficiency and availability of the ‘factors of production’ ie. Land, labour, capital and enterprise. When efficient and available the product is then able to create economic growth.

Introduction
Through the use of the Product Possibility Frontier[PPF], this report aims to illustrate economic growth over the period of a century for two products. This is conducted with focus on the availability and efficiency of land, labour and capital resources. Assuming ceteris parabus - all things remain the same
[Pettinger 2012] in this two-product market.

Resources For The Production of a Bottle of Wine

Land
Land is the raw resource needed to grow the vines which produce a bottle of wine. Land is also finite and for the purpose of this report, measures such as land reclamation are considered expensive, unrealistic and unmeasurable.

Labour
The labour, a measure of work done by human beings[Blundell&MacCurdy, 2008], involves planting, picking, netting, harvesting, crushing, barrelling and bottling weigh heavily on the cost of labour as these operations take a great deal of time and man power[Grainger&Tattersall, 2005].

Capital
The personal investment of capital into the production of a bottle of wine is extensive. Wine making equipment such as fermenters, tractors, nets, presses, pumps, fixed/moveable hoses and pipes, filters, refrigerators, barrels, cleaning/laboratory equipment etc… are not only expensive items, but are essential to quality wine production[Grainger&Tattersall, 2005].

Resources For The Production Of A Tour of the Wine Region of France

Land
Land resources are restricted to the borders of the French Nation. With French wineries being the attraction, similar to the production of a bottle of wine, land is a vital resource for the future development of the winery tour product. Moreover, the use of roads to access these wineries must also be considered, as it will subtract from land supply.

Labour
The labour resources present for a wine region tour in France include: Frontline workers sustaining the wineries as the primary attractions, tour drivers and guides as well as travel agents bringing the demand to this location specific product.

Capital
Modes of transportation are the primary capital resource to consider in regard to this service product. A tour cannot take place over a region of this magnitude without adequate transport. The secondary capital resource takes form in the wineries themselves. Examples of such capital resources have been mentioned under ‘Capital resources’ for product 1. This equipment ensures the production of wine, the key attraction of a wine tour.

Availability & Efficiency Of Resources Over The Past Century.
1912 - 2012

Product 1 – A bottle of wine

Land
From 1912 to 2012, demand for wine has increased dramatically due to social trends and development in vine varietals. Vast amounts of land are essential to the growth of the grape vines. It can therefore be presumed that an increase in land resources will result in a positive growth in the production quantity of a bottle of wine. However, Mark Twain said it best in saying:
“Land, they aren’t making anymore of it!” Mark Twain
Thus, with the availability of land being limited, the economic growth of this product is relies on alternative methods. The…