Now that you have designed your paper product, and managed an allocation of resources:
explain how markets influence the allocation of resources and the effect of prices on these decisions. Use this data:
Item Description Unit Price (e.g. 1 pipe cleaner=10cents Quantity Required for 100 Units Total Cost of Item
Glue
Stick things together $3.00 5 $15.00
Scissors
Sharp metal object that can cut through paper $3.00 2 $6.00
PVA Glue
PVA Glue can also stick things together $5.00 2 $10.00
Coloured Paper
A4 Paper that can have various colours 20c 100 $20.00
Pipe Cleaners
Piper Cleaners, different colours $1.00 10 $10.00
In the market, the prices of the resources play a critical role in influencing the allocation of resources. For instance, in the data provided, the unit price of glue is $3.00, while the unit price of PVA glue is $5.00. This price difference could lead to a decision to use more regular glue instead of PVA glue in order to save costs. This reallocation of resources based on price is a common occurrence in market economies.
Similarly, the price of coloured paper at 20 cents per sheet is lower than the price of pipe cleaners at $1.00 each. This difference in price could influence the decision to use more coloured paper in the product design in order to minimize costs.
In conclusion, prices in the market play a significant role in determining how resources are allocated. Lower prices can lead to higher demand for a resource, while higher prices can reduce demand. This interplay of prices and allocation of resources is a key feature of market economies.