Question

In: Economics

In the country of Zip, Zappo is a very important resource. The economy of Zip has been using 1,000 tons of Zappos every year, and there are only 30,000 tons of Zappos left

In the country of Zip, Zappo is a very important resource. The economy of Zip has been using 1,000 tons of Zappos every year, and there are only 30,000 tons of Zappos left. Sam is a concerned citizen of Zip. Sam says “we need new government policies to conserve Zappo. If we don’t make some kind of policy, we will run out of Zappo in 30 years, and then the economy will collapse.”  Is the economy sure to collapse in 30 years without new government policies to conserve Zappo? Why or why not?

Solutions

Expert Solution

No the economy is not sure to collapse in 30 years because the collapse doesnt solely depend on Zappo. It also depends on a few other factors. These are-

  • Alternatives- If one or more aternatives of Zappo are found, then the economy will start using them and the dependency on Zappo will lessen.
  • The structure of the economy- The economy itself may change and move away from its very high dependency on Zappo. It might diversify into other sectors and hence avoid the collapse.
  • Trade- Its entirely possible that there are other countries which also have Zappo resources. Trading can also provide the resource.

As we can see, there are a few other factors on which the possibility of collase depends and its not necessary that the economy will collapse in 30 years without conversing Zappo.


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