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In our first modules, we learnt some key economic concepts such as scarcity, supply and demand.
In our first modules, we learnt some key economic concepts such as scarcity, supply and demand. To see how these concepts are applicable in the real world, I would like you to review the following articles related to the Singapore government's recent announcement to cap the number of permits required for owning a vehicle (known as Certificates of Entitlement or COE).
http://www.straitstimes.com/singapore/transport/lta-scraps-vehicle-growth-rate (Links to an external site.)
Links to an external site.
Links to an external site.
After reading, please complete the following:
- Explain how the concept of the scarcity applies in this example;
- Draw the supply and demand curves before and after the policy change; and
- Explain what you think is likely to happen to the price of the COE after the policy change is implemented.
