Supply, Demand and the Entrepreneur
Autor: georgeoliver98 • October 31, 2015 • Coursework • 505 Words (3 Pages) • 1,209 Views
Supply, Demand and the Entrepreneur By the edge of Lake Victoria, Tanzania, is a village with 2,000 people. It is poor, but has its own fishing boats, boatbuilder, vegetable field and (tiny) street market. The villagers work together, but individuals can keep any money they make. One villager, Pembo, noticed that – year after year – the villagers planted tomatoes in the ideal growing conditions of the rainy season. | [pic 1] |
But when the tomatoes were ripe the price in the local market town was too low to make a profit. Fewer people wanted to buy them (they grew their own) and far more growers brought tomatoes to the marketplace.
In August 2008 Pembo marked out a large patch of sandy earth by the side of the lake, and sowed tomato seeds. As the rainy season was over, he had to water by hand. Every day he spent hours collecting water in a bucket from the lake and watering each plant. He marked his patch out carefully and re-planted each seedling to give it the space to grow. He tied them, tended them and eventually was able to harvest them and take them to the market. Whereas the villagers’ tomatoes usually fetched $2 per bushel, Pembo’s made $5. As he had done all the work himself, the villagers accepted that he kept all the money: this proved to be just over $100 for two months’ work (about 6 times the average income). He used the $100 to buy a second hand motorbike with a trailer.
Others in the village soon copied the method for growing tomatoes, though Pembo was already onto his next idea. He paid two 12-year-olds to look after his own patch, while he talked to a hotel in the Serengeti National Park about delivering all their fruit and vegetables.
[pic 2] | Questions (25 marks; 30 minutes) 1. Outline two possible motives for Pembo’s business start-up. (4) 2. Explain using a relevant diagram (with two shifts) what happens to the price of tomatoes in the rainy season. (10) 3. Explain using a relevant diagram why Pembo is unable to keep on making a good income from growing tomatoes. (7) 4. Show using a PPF curve, what has happened to the production of tomatoes and other goods in the village? (4) |
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