Multiple Choice
Which of the following statements is NOT true about opportunity cost?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Other things equal, which of the following best explains why scarcity forces individuals to make choices?
A
Resources are limited, so individuals must decide how to allocate them among competing uses.
B
Prices are always fixed, so individuals do not need to make choices.
C
Scarcity only affects producers, not consumers.
D
Unlimited resources mean individuals can satisfy all their wants without making choices.
Verified step by step guidance1
Understand the concept of scarcity in microeconomics: Scarcity means that resources are limited relative to the unlimited wants and needs of individuals.
Recognize that because resources (such as time, money, labor, and raw materials) are limited, individuals cannot have everything they desire and must prioritize their wants.
Identify that this limitation forces individuals to make choices about how to allocate their scarce resources among competing uses to maximize their satisfaction or utility.
Evaluate the given options by comparing them to the definition of scarcity and its implications: the correct explanation should reflect the limitation of resources and the necessity of choice.
Conclude that the best explanation is the one stating that 'Resources are limited, so individuals must decide how to allocate them among competing uses,' because it directly addresses the fundamental economic problem of scarcity.
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