10 Questions
What is the fundamental reason why individuals and organizations are forced to make choices?
Limited resources
What is the term for the value of the next best alternative that is given up when a choice is made?
Opportunity cost
What is the result of the unlimited wants of individuals and organizations?
Scarcity
What is the definition of scarcity?
The inability to satisfy all wants at the same time
What are the four types of resources?
Natural, human, capital, and entrepreneurship
What is the relationship between wants and resources?
Wants are unlimited, resources are limited
What is the definition of choice?
The selection of an item or action from a set of possible alternatives
Why do individuals need to consider the value of what is given up when making a choice?
Because of the opportunity cost
What is the result of making a choice?
You are choosing one thing and not choosing another
What is the common problem faced by individuals, businesses, and governments?
Scarcity
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.
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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