1.1 Scarcity

• What is the basic economic problem defined by scarcity?

  Limited resources vs unlimited wants
• Understanding scarcity is essential for decision-making in macroeconomics.


  True
• Why is scarcity crucial for macroeconomic decision-making?

  Requires efficient resource allocation
• What resolves a shortage in the market?

  Price adjustments
• What is the key difference between scarcity and shortage?

  Permanent vs temporary imbalance
• Opportunity costs are always monetary in nature.

  False
• What does the basic economic problem necessitate regarding resources?

  Making choices about allocation
• The basic economic problem arises from the imbalance between limited resources and unlimited wants.
• When resources are limited due to scarcity, individuals must make trade-offs and prioritize needs.
• What role do resources play in scarcity?

  They are limited, causing choices
• Natural resources such as land, minerals, and timber are examples of scarcity
• Match the resource category with its example:

  Natural Resources ↔️ Land

  Human Resources ↔️ Labor

  Capital Resources ↔️ Machinery
• Scarcity is a fundamental economic problem, while a shortage is a temporary market imbalance.


  True
• Every choice made in the presence of scarcity involves an opportunity cost.


  True
• Scarcity leads to opportunity costs, which are the value of the next best alternative foregone.