1.1 Scarcity

• Scarcity is a basic problem faced by all economies.


  True
• Steps to address scarcity in economics

  1️⃣ Identify unlimited wants and needs

  2️⃣ Acknowledge limited resources

  3️⃣ Prioritize needs over wants

  4️⃣ Allocate resources efficiently
• Scarcity forces individuals and societies to make tradeoffs
• What is a need in economics?

  Essential for survival
• Scarcity forces individuals and societies to make choices about resource allocation.

  True
• Choosing to go to a movie instead of studying has an opportunity cost of educational benefits.

  True
• Match the allocation method with its description:

  Price Mechanism ↔️ Distribution based on supply and demand

  Central Planning ↔️ Government controls resource distribution

  Mixed Economies ↔️ Combines market and government intervention
• What fundamental economic problem is created by unlimited wants and limited resources?

  Scarcity
• What is scarcity in economics?

  Limited resources vs. unlimited wants
• Give an example of a need.

  Food, water, shelter
• How does scarcity lead to choice?

  Forces prioritization of resources
• What is the opportunity cost of studying instead of watching a movie?

  Entertainment from the movie
• Match the type of decision with its example:

  Personal decision ↔️ Going to a movie vs. Studying

  Business decision ↔️ Investing in new product vs. Upgrading equipment
• The key difference between needs and wants is that needs must be satisfied
• Opportunity cost is the value of the next best alternative forgone
• Allocation is the process of distributing resources to their best use
• Unlimited wants refer to the unending desires and needs of individuals and societies
• What is an example of unlimited wants versus limited resources for a family with a fixed budget?

  Luxury car or larger house
• Wants are desires that are not essential for survival
• Needs must be satisfied before wants.


  True
• Opportunity cost is the value of the next best alternative forgone.


  True
• Opportunity cost represents what one loses by choosing one option
• Scarcity requires societies to prioritize needs over wants
• What is an example of a trade-off a family might face due to scarcity?

  Buying a TV or utilities
• What is the opportunity cost for a company that invests in a new product line rather than upgrading equipment?

  Potential productivity and sales from equipment upgrade
• The price mechanism can lead to market failures and inequality.


  True
• Match the economic concept with its key characteristic:

  Unlimited wants ↔️ Unsatiable, diverse, subjective

  Limited resources ↔️ Exhaustible, restricted, valuable