Answer all of the following questions. 1 Silver Arrow Lid faces a basic economic problem. (a) With reference to Silver Arrow's current situation, explain what is meant by the term "the basic (central) economic problem'. (b) With reference to Silver Arrow's current situation explain what is meant by the term 'opportunity cost'.The Silver Arrow Bicycle Company The Silver Arrow Bicycle Company was established in 1908 and is still family owned. The rm manufactures a range of bicycles. accessories. and associated sports garments. John and Iona Silver are the current owners and both at them represented Scotland as sprint cyclists at the Commonwealth Games. Presently the rm employs over 100 workers at its factorylust outside Glasgow. The company has been protable, with rapid but stable growth taking place over the last 10 years. Over the past 18 months the recession has meant that unemployment has risen signicantly and there has been a widespread degree of wage restraint throughout the UK. Despite these economic pressures the recession has had a surprisingly small impact upon sales oi Silver Arrcw's main products. The demand tor Silver Arrow's cycles has. to date, proved to be relatively income inelastic. Research has indicated that the success of Team GB cyclists at the past two Olympic Genres has helped boost sales and prots. The company has built an enviable reputation producing high quality products to suit a variety of needs at a wide range of prices. Silver Arrow produces cycles for tour main customer groups. They produce specialist racing road cycles that use cutting edge technology targeting athletes and serious club cyclists. These cycles have proved highly popular. are often custom designed. hand built and are very expensive. They produce more reasonably priced racing road bikes for the general public that use them for pleasure rather than competition. they also produce stylish well-built standard general purpose cycles designed for commuting and family outings. Sales of these cycles have also increased. and this has been attributed to the growing public awareness of environmental issues. The fourth group of products comprises mountainltrait bikes which are predominantly used on trails in the countryside. 'l'he govemment has been actively promoting cycling as a means of keeping t and this too seems to be impacting upon the business in a positive manner. The UK National Cycling Association is about to launch a major promotional campaign to encourage health and litness through increased participation in cycling