Multiple Choice
All societies face a trade-off for every decision for which of the following reasons?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following best describes the basic choices faced by all societies due to scarcity?
A
How to maximize profits, minimize costs, and increase exports
B
What to produce, how to produce, and for whom to produce
C
What goods are free, which are scarce, and how to avoid trade-offs
D
How to eliminate scarcity, increase resources, and reduce opportunity cost
Verified step by step guidance1
Understand the concept of scarcity: Scarcity means that resources are limited while human wants are unlimited, forcing societies to make choices about resource allocation.
Identify the fundamental economic problem: Because of scarcity, societies must decide what goods and services to produce, how to produce them, and for whom they should be produced.
Recognize that these three questions—what to produce, how to produce, and for whom to produce—are the basic economic choices every society faces.
Evaluate the other options and see why they do not fully capture the essence of scarcity: maximizing profits or eliminating scarcity are not basic economic choices but rather goals or impossible conditions.
Conclude that the best description of the basic choices due to scarcity is the set of questions: what to produce, how to produce, and for whom to produce.
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