The Fundamental Economic Problem Quiz

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Questions and Answers

What is the fundamental economic problem?

The fundamental economic problem is the scarcity of resources relative to unlimited wants.

What is the difference between wants and needs?

Needs are things that are necessary for survival like food, shelter and clothing while wants are things that are desired but not necessary for survival.

Why do individuals, firms and governments have to make choices?

They have to make choices due to the scarcity of resources and the need to allocate them efficiently between competing uses.

What are some examples of wants mentioned in the text and why are they sometimes called luxuries?

Examples of wants mentioned in the text include television, cars, and trips to the cinema. They are sometimes called luxuries because they are not essential for survival, and may not be prioritized by everyone on their scale of preference. Signup and view all the answers

What are some factors that influence an individual's scale of preference?

Factors that influence an individual's scale of preference include culture, upbringing, and life experiences. Signup and view all the answers

Why do scales of preference vary widely between individuals?

Scales of preference vary widely between individuals because everyone has a unique set of influences that shape their likes and dislikes, including culture, upbringing, and life experiences. Signup and view all the answers

What are some examples of how an individual's wants may change as they move from a single-person household to a family household?

Their wants may change from a small car with two doors to a large, family car with five doors. They may also want different types of furniture, appliances, or clothing to accommodate their family's needs. Signup and view all the answers

How do some wants develop and expand in individuals?

Some wants may develop and expand when individuals see others enjoying particular goods and services and so desire to have those goods as well. Signup and view all the answers

Why is society still faced with the fundamental economic problem despite businesses finding new, more efficient ways to produce goods and services?

Society is faced with the fundamental economic problem of limited resources and unlimited wants, which means that even though businesses may produce more goods and services efficiently, people will always have more wants and desires than can be fulfilled with the available resources. Signup and view all the answers