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6. Economic Methodology and the Economic Problem
6.2 The Economic Problem
6.2.1 Scarcity and Choice
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Scarcity arises because human wants are unlimited and resources are
finite
True
Choice is necessary because scarcity forces individuals, businesses, and governments to make decisions about
resource allocation
True
Opportunity cost is the value of the next best alternative that is chosen
False
Scarcity
is a fundamental concept in economics that highlights the challenge of making choices about how to allocate
resources
Scarcity arises from unlimited resources and limited human wants
False
What is an example of unequal distribution of resources?
Water scarcity in arid regions
Needs are essential for survival, while wants are desired but not
essential
What is an example of a producer choice?
Producing cars or trucks
Finite resources are an example of a source of
scarcity
True
Choice
is necessary because scarcity requires decisions about how to allocate
resources
Choice is the process of selecting one option from available alternatives when resources are unlimited.
False
Match the type of choice with its description:
Consumer Choices ↔️ Decisions about what to buy
Producer Choices ↔️ Decisions about production
Government Choices ↔️ Decisions about resource allocation
Trade-offs involve giving up one thing in order to gain something else due to unlimited resources.
False
What type of trade-off involves allocating public funds between various sectors?
Government trade-off
Scarcity
refers to the condition where limited resources are insufficient to satisfy unlimited wants and
needs
Needs are essential for survival, while wants enhance comfort or
pleasure
Match the concept with its description:
Scarcity ↔️ Limited resources versus unlimited wants
Choice ↔️ Selecting one option from alternatives
Opportunity Cost ↔️ Value of the next best alternative forgone
Trade-offs ↔️ Balancing competing objectives
How does scarcity apply to economic models?
Resource allocation decisions
Order the resource types from most to least tangible:
1️⃣ Capital
2️⃣ Natural
3️⃣ Human
Finite resources, unequal distribution, consumer demand, and production limitations are all sources of
scarcity
Order the concepts from most essential to least essential:
1️⃣ Needs
2️⃣ Wants
Choice occurs because resources are unlimited and wants are finite
False
Every choice involves an opportunity cost, which is the value of the next best
alternative
What impact does a lack of needs have on individuals?
Threat to health or safety
What is the opportunity cost of a choice?
Next best alternative forgone
Individuals, businesses, and governments must make decisions about how to allocate scarce resources due to
scarcity
What is the opportunity cost of allocating a budget to healthcare instead of education?
Value of education forgone
Consumer trade-offs involve balancing the purchase of different goods and services within a
budget
Trade-offs highlight the need to weigh the opportunity costs and
benefits
of each option when making decisions.
True
Scarcity
refers to the condition where limited resources are insufficient to satisfy unlimited
wants
Match the source of scarcity with its example:
Finite Resources ↔️ Limited supply of fossil fuels
Unequal Distribution ↔️ Water scarcity in developing regions
Consumer Demand ↔️ Shortage of latest smartphones
Production Limitations ↔️ Shortage of skilled workers
What is an example of scarcity caused by finite resources?
Limited supply of fossil fuels
Scarcity can arise from unequal distribution of
resources
across regions.
True
A shortage of skilled workers in certain industries is an example of scarcity caused by production
limitations
What is the opportunity cost of buying a car instead of investing in a home?
Value of investing in home
Understanding opportunity costs helps
decision-makers
prioritize resources effectively.
True
Scarcity
is the condition where limited resources cannot satisfy unlimited wants and
needs
What is an example of scarcity in arid regions?
Fresh water availability
Order the sources of scarcity from most fundamental to specific examples:
1️⃣ Finite Resources
2️⃣ Unequal Distribution
3️⃣ Consumer Demand
4️⃣ Production Limitations
The unequal distribution of resources across regions leads to scarcity, such as water in
arid
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