Economics Basics: Scarcity, Choice, and Cost

Questions and Answers

Whether it has alternative uses (correct)

Whether it is essential for breathing

Whether it can be polluted

Whether it can be bought or sold

Gravity (correct)

Outer space

Water

Clean air

We start using more air to breathe

We start using more pollution-generating activities

We limit the activities that generate pollution (correct)

We start selling clean air

Because we find new ways to use it Signup and view all the answers

It has no effect on their use of gravity Signup and view all the answers

Very wide, covering virtually everything Signup and view all the answers

Because our resources are limited Signup and view all the answers

Having to choose among alternatives Signup and view all the answers

A parcel of land Signup and view all the answers

Because our resources are limited Signup and view all the answers

All of the above Signup and view all the answers

Because land is scarce Signup and view all the answers

We must make choices among alternatives Signup and view all the answers

No, because it is abundant Signup and view all the answers

Study Notes

All choices involve selecting one alternative over another, which is central to economics.
Scarcity is the condition of having to choose among alternatives due to limited resources.
Unlimited wants (desires for goods and services) collide with limited resources, forcing us to make choices.
A scarce good is one for which the choice of one alternative requires giving up another.

Land is a scarce good with alternative uses (e.g., housing, gas station, park, or leaving it undeveloped).
The choice of one use for land means giving up another use (e.g., if the Lees live in the house, the Nguyens cannot).
Virtually everything is scarce due to alternative uses (e.g., air for breathing and as a garbage dump).

A free good is one for which the choice of one use does not require giving up another.
Examples of free goods are rare, but include gravity, where one person's use does not affect another's use.
Outer space was once a free good but is now becoming scarce due to increased use (e.g., allocation of orbital slots for communications satellites).

Scarcity characterizes virtually everything, making the scope of economics extensive.
Economics is necessary because our unlimited wants collide with limited resources, forcing us to make choices.