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Economics: Scarcity and Opportunity Cost

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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?

The inability to satisfy all wants at the same time Signup and view all the answers

What are the four types of resources?

Natural, human, capital, and entrepreneurship Signup and view all the answers

What is the relationship between wants and resources?

Wants are unlimited, resources are limited Signup and view all the answers

What is the definition of choice?

The selection of an item or action from a set of possible alternatives Signup and view all the answers

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

Because of the opportunity cost Signup and view all the answers

What is the result of making a choice?

You are choosing one thing and not choosing another Signup and view all the answers

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

Scarcity Signup and view all the answers

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.