Multiple Choice
Which of the following best describes how scarcity affects both consumers and producers in a market economy?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which best explains why not all goals in economics can be met?
A
Government intervention eliminates all trade-offs.
B
Markets always produce the most efficient outcomes.
C
Unlimited resources allow for all goals to be achieved.
D
Resources are limited, so choices must be made about how to allocate them.
Verified step by step guidance1
Understand the fundamental economic problem: scarcity. Scarcity means that resources are limited and cannot satisfy all human wants and needs simultaneously.
Recognize that because resources are limited, individuals, firms, and governments must make choices about how to allocate these resources efficiently.
Identify that every choice involves trade-offs, meaning that pursuing one goal often requires sacrificing another due to limited resources.
Acknowledge that government intervention or market mechanisms cannot eliminate these trade-offs because the scarcity of resources is a natural constraint.
Conclude that not all economic goals can be met at the same time because of these inherent limitations in resource availability and the necessity of making allocation decisions.
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