Economics: Scarcity and Opportunity Cost
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Questions and Answers

What is the fundamental reason why individuals and organizations are forced to make choices?

  • Opportunity costs
  • Government decisions
  • Limited resources (correct)
  • Unlimited wants

What is the term for the value of the next best alternative that is given up when a choice is made?

  • Opportunity cost (correct)
  • Scarcity
  • Resource allocation
  • Choice

What is the result of the unlimited wants of individuals and organizations?

  • Unlimited resources
  • Abundance
  • Scarcity (correct)
  • Limited resources

What is the definition of scarcity?

<p>The inability to satisfy all wants at the same time (B)</p> Signup and view all the answers

What are the four types of resources?

<p>Natural, human, capital, and entrepreneurship (A)</p> Signup and view all the answers

What is the relationship between wants and resources?

<p>Wants are unlimited, resources are limited (C)</p> Signup and view all the answers

What is the definition of choice?

<p>The selection of an item or action from a set of possible alternatives (D)</p> Signup and view all the answers

Why do individuals need to consider the value of what is given up when making a choice?

<p>Because of the opportunity cost (C)</p> Signup and view all the answers

What is the result of making a choice?

<p>You are choosing one thing and not choosing another (A)</p> Signup and view all the answers

What is the common problem faced by individuals, businesses, and governments?

<p>Scarcity (A)</p> Signup and view all the answers

Flashcards

Opportunity cost

The value of the next best alternative that is given up when a choice is made.

Scarcity

The inability to satisfy all wants at the same time.

Natural resources

Natural resources include land, water, forests, and minerals.

Human resources

Human resources encompass the skills, knowledge, and abilities of individuals.

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Capital resources

Capital resources are the tools, equipment, and infrastructure used in production.

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Entrepreneurship

Entrepreneurship is the ability to combine resources to create new products or services.

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Choice

The selection of an item or action from a set of possible alternatives.

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Limited resources

The fundamental reason why individuals and organizations are forced to make choices.

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Scarcity

The result of the unlimited wants of individuals and organizations.

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Study Notes

Scarcity and Choice

  • Scarcity forces individuals, businesses, and governments to make choices because of limited resources and unlimited wants.
  • Every choice has an opportunity cost, which is the value of the next best alternative given up.

Types of Resources

  • Resources are factors of production used to produce goods and services.
  • There are four types of resources:
    • Natural resources
    • Human resources
    • Capital resources
    • Entrepreneurship resources

Opportunity Cost

  • Opportunity cost is the value of the next best alternative given up when a choice is made.
  • Individuals must consider the value of what is given up when making a choice.

The Problem of Scarcity

  • Scarcity is the inability to satisfy all wants at the same time.
  • Limited resources and goods require that choices be made.
  • Scarcity affects individuals, businesses, and governments, leading to difficult decisions.

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Description

Learn about the concept of scarcity and how it affects decision-making for consumers, producers, and governments. Understand how every choice has an opportunity cost and what it means for economic decision-making.

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