Multiple Choice
If 75% of India's rural population lives in poverty, it most likely means that:
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
As a consequence of the problem of scarcity, which of the following must individuals and societies do?
A
Ignore the need for trade-offs
B
Make choices about how to allocate limited resources among competing uses
C
Produce unlimited goods and services to satisfy all wants
D
Eliminate opportunity costs
Verified step by step guidance1
Understand the concept of scarcity: Scarcity means that resources are limited while human wants are unlimited, which creates a fundamental economic problem.
Recognize that because resources are limited, individuals and societies cannot have everything they want, so they must make decisions on how to best use these limited resources.
Identify that making choices involves trade-offs, meaning choosing one option requires giving up another, which introduces the concept of opportunity cost.
Conclude that due to scarcity, individuals and societies must allocate their limited resources among competing uses, deciding what to produce, how to produce, and for whom to produce.
Note that ignoring trade-offs, producing unlimited goods, or eliminating opportunity costs are not possible solutions to scarcity, as they contradict the basic economic problem.
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