Question

Resources are very scarce around the United States. Identify one scarce resource and analyze the impact of the scarcity of that resource on an economy. What is one solution that the government can provide to ensure that the scarcity will not be impacted as much?

This assignment will require you to write an analysis with a minimum of 3-5 paragraphs. You will need to focus on your analysis and address each aspect of the question. You will be graded based on your analysis and how well you answered the questions. You will submit a one-page document

Answer 1

Resources are very scarce around the United States. One scarce resource can be 'crude oil'.

Impact of the scarcity can be as follows:

1. US has to pay a higher price for importing the oil from countries like, Saudi Arabia, Iran, etc.
2. Since US imports oil worth $109 billion per year on an average, as a result the exchange rate fluctuates.
3. US people has to pay more taxes on oil to the government. Consequently, the net disposable income of the common citizens decreases.
4. US indirectly is paving the way for countries like Saudi Arabia, Iran to become more economically powerful than before by helping them to generate more income by exporting the crude oil to US

Solution that the government can provide to ensure that the scarcity will not be impacted as much can be as follows:

1. US can sign a contract between oil exporting countries like, Saudi Arabia and Iran to make them import other goods of US to their countries in order to ensure a trade balance between US and other oil exporting countries.
2. US government can fix a price ceiling for importing oil so that the oil exporting countries get prohibited to charge excessive surge prices. As a result US citizens would not drain a large percentage of their income in availing crude oil.
3. US government can also encourage the production of electric vehicles so that amount of crude oil which is used as fuel to run vehicles would be minimized and as a result the import of crude oil by USA will fall. Consequently the national income level will rise as government expenditure to import crude oil will be reduced.