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Economics Assignment 1 1. (a) Explain, using supporting examples and illustrations, how the forces of Demand and Supply allocate scarce resources under a free market system. Highlight the importance of prices as a signalling device within this process. In general, the word ''scarcity'' is an important term in economics and also is the problem of economic facing. It can be explained as people all have different wants and needs and they are all unlimited, however, the world cannot produce the amounts that can satisfy all those people's wants and needs as the resources, Land, Labour, Capital and Enterprise are limited. In order to solve the problem is to investigate how the different economic systems, free market economy, planned economy and mixed economy work and the role of demand, supply and price in each economy system. Under market economy, known as free market economy, where there are no government interventions, consumers are free to...

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