Multiple Choice
Which of the following best describes a key difference between the economy of Cuba and the economy of North Korea?
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1. Introduction to Macroeconomics
Introduction to Economics
Multiple Choice
If an economy is unable to produce the goods and services that people want, which of the following is most likely to occur?
A
The standard of living will automatically improve.
B
Unemployment will immediately drop to zero.
C
Scarcity will increase, leading to higher prices and unmet needs.
D
Resources will become unlimited.
Verified step by step guidance1
Step 1: Understand the concept of scarcity in macroeconomics. Scarcity refers to the fundamental economic problem of having limited resources to meet unlimited wants and needs.
Step 2: Recognize that if an economy cannot produce the goods and services people want, the supply of these goods and services is insufficient relative to demand.
Step 3: Analyze the consequences of insufficient supply: when demand exceeds supply, scarcity increases, which typically leads to higher prices as consumers compete for limited goods.
Step 4: Consider the impact on unmet needs: because the economy cannot produce enough, some consumer needs and wants remain unsatisfied, affecting overall welfare.
Step 5: Conclude that this situation does not lead to automatic improvements in living standards, zero unemployment, or unlimited resources, but rather to increased scarcity, higher prices, and unmet needs.
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