6.2.1 Scarcity and Choice

• Scarcity occurs when there are limited resources available to satisfy unlimited wants
• Scarcity is defined as limited resources versus unlimited wants
• What is opportunity cost?

  The next best alternative
• Prioritizing road construction over school funding illustrates opportunity cost.


  True
• Natural resources such as land and minerals are examples of scarcity
• Why does opportunity cost arise in economics?

  Due to scarcity
• Understanding opportunity cost is crucial for making economically efficient decisions.


  True
• Scarcity occurs when there are limited resources to satisfy unlimited wants
• Match the resource type with an example:

  Natural Resources ↔️ Land

  Human Resources ↔️ Skills

  Capital Resources ↔️ Machinery
• Opportunity cost arises from scarcity and the need to make choices


  True
• Water is an example of a natural resource
• Why is understanding opportunity cost essential for economic efficiency?

  It informs better decisions
• Opportunity cost is the value of the next best alternative that is given up
• If a business invests in a new factory instead of expanding marketing, the opportunity cost is the potential increase in brand visibility


  True
• Match the scarce resource with the choice made and its opportunity cost:

  Time and money ↔️ Choosing to work extra hours for more income ||| Opportunity Cost: The leisure time and relaxation given up

  Capital and skilled labor ↔️ Investing in a new factory instead of expanding marketing ||| Opportunity Cost: Potential increase in brand visibility foregone

  Tax revenue ↔️ Allocating funds to education instead of infrastructure ||| Opportunity Cost: Infrastructure projects delayed
• What is the fundamental economic problem that leads to scarcity?

  Unlimited wants, limited resources
• Unlimited wants exceed available resources, causing scarcity.


  True
• Scarcity forces governments to make choices about resource allocation
• What are the three types of resources subject to scarcity?

  Natural, human, capital
• Scarcity forces businesses to decide how to allocate limited resources to satisfy unlimited wants.


  True
• Choosing to buy a new laptop instead of going on vacation illustrates opportunity cost
• What does opportunity cost represent in economic decision-making?

  The most valuable alternative
• Human resources include labor and skills


  True
• How does scarcity influence choice in economic decision-making?

  It forces a selection
• What is the opportunity cost for a government that prioritizes road construction over school funding?

  Lost educational benefits
• Match the choice level with an example and its opportunity cost:

  1️⃣ Individual: Buying a new laptop instead of going on a vacation ||| Opportunity Cost: The value of the vacation that is missed

  2️⃣ Business: Investing in expanding production capacity instead of R&D ||| Opportunity Cost: The potential benefits of the R&D project

  3️⃣ Government: Spending on a new highway over funding public healthcare ||| Opportunity Cost: The value of healthcare services foregone
• What is the opportunity cost if a government prioritizes road construction over school funding?

  Lost educational benefits