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Questions and Answers
What is the fundamental principle of the Law of Scarcity?
What is the fundamental principle of the Law of Scarcity?
- Resources are infinite, but wants are finite
- Resources are infinite, and wants are infinite
- Resources are finite, and wants are finite
- Resources are finite, but wants are infinite (correct)
What is the implication of infinite resources?
What is the implication of infinite resources?
- Resources would be wasted
- Everything would be free (correct)
- There would be no economic problem
- Everything would be expensive
What is the definition of Economics based on the Law of Scarcity?
What is the definition of Economics based on the Law of Scarcity?
- The study of the production and distribution of goods and services with unlimited wants and needs
- The study of the production and distribution of goods and services to satisfy humans' finite wants and needs with scarce resources (correct)
- The study of the production and distribution of goods and services to satisfy humans' finite wants and needs with infinite resources
- The study of the production and distribution of goods and services with infinite resources
What does the Production Possibility Frontier (PPF) show?
What does the Production Possibility Frontier (PPF) show?
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What happens when a country is operating on its Production Possibility Frontier (PPF)?
What happens when a country is operating on its Production Possibility Frontier (PPF)?
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What is the primary reason for the generation of the Production Possibility Frontier (PPF)?
What is the primary reason for the generation of the Production Possibility Frontier (PPF)?
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Study Notes
Law of Scarcity
- Economic resources (factors of production) are not infinite, including land, labor, capital, and talent/entrepreneurship.
- If resources were infinite, everything would be free, but since they're not, scarcity exists.
- The Law of Scarcity is a fundamental concept in economics, emphasizing that resources are limited.
Definition of Economics
- Economics is the study of the production and distribution of goods and services to satisfy humans' finite wants and needs with scarce resources.
Production Possibility Frontier (PPF)
- PPF is generated due to the Law of Scarcity.
- PPF shows the maximum amounts of production that can be obtained by an economy given its:
- Technological knowledge
- Quantity of inputs or resources available
- When a country operates on its PPF, it is allocating resources efficiently.
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Description
This quiz covers the concept of the Law of Scarcity in economics, which states that economic resources are limited and not infinite. Test your understanding of this fundamental principle.
