Economic Problem Essay

1199 Words5 Pages
Along with the development of the earth is a series of social events need to be addressed, such as population growth, food shortages and water shortages in many parts of the world. Specifically, people in Australia are facing with the threat of water shortage in the future. This problem has created an economic problem and urged the Australian government to find the solutions for this problem. This essay will explain the economic problem and answer the question how do markets attempt to solve the problem of water scarcity in Australia, focusing on the economic problem, water scarcity in Australia, the role of markets and water market in Australia. The economic problem can be known as the competition between unlimited wants and scarce…show more content…
In order to solve the economic problem, we must choose how to use our scarce resources efficiently. If the choices are made, sources can be used efficiently. For instance, the Australian Governments is restoring the Balance in the Murray-Darling Basin to keep the water in this basin and protect the environment. They are making decision since the water is scarce. Australian Governments (2010) showed that water which available in Murray-Darling Basin declines, so this basin is likely to become worse. The problem is water in Australia is not unlimited. We therefore have to make choices. The choice can be known as opportunity cost. Since we never have enough resources at our disposal, we have to give up something in order to get another thing we want. For example, Morton and Shippen have to make the decision between selling water to the government or keeping the water for their using and their agriculture. If they decide to keep the water, the money from selling water is forgone and vice-versa. So, scarcity forces making choice. The role of market can help solving the economic problem. A market can be known as an actual place where buyers and sellers interact to trade goods, services for money. They interact in the market to determine the price. The diagram shows the way market finds the price for water. At point E, quantity demanded equals quantity supplied and the price of goods that customers are willing and able to buy equals the price of goods
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