Multiple Choice
Why is it necessary to use decision-making skills when you have limited resources?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following is a trade-off faced by a family deciding whether to buy a new car?
A
Spending money on a new car means less money available for vacations or savings.
B
The price of gasoline increases due to global oil market fluctuations.
C
The government sets a new tax rate for automobile purchases.
D
Car manufacturers introduce new models with advanced technology.
Verified step by step guidance1
Understand the concept of a trade-off in microeconomics: it refers to the idea that choosing more of one thing usually means having less of another due to limited resources.
Identify the decision the family is making: whether to buy a new car or not, which involves allocating their limited budget.
Recognize that spending money on a new car reduces the amount of money available for other uses, such as vacations or savings, illustrating a direct trade-off.
Distinguish this from external factors like changes in gasoline prices, government tax rates, or new car models, which are not trade-offs but rather external influences or market changes.
Conclude that the trade-off is the opportunity cost of buying the car, which is the value of the next best alternatives forgone, such as vacations or savings.
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