Multiple Choice
In the context of scarcity and choice, what is the opportunity cost of producing product B?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
What does it mean to say that a resource is scarce?
A
The resource is abundant and available to everyone without restriction.
B
The resource is only used in the production of luxury goods.
C
The resource has no opportunity cost when used.
D
The resource is limited and cannot satisfy all wants and needs.
Verified step by step guidance1
Understand the concept of scarcity in microeconomics: Scarcity means that resources are limited in quantity and cannot fulfill all the wants and needs of people.
Recognize that scarcity implies a trade-off because using a resource for one purpose means it cannot be used for another, which introduces opportunity cost.
Contrast scarcity with abundance: If a resource were abundant and available without restriction, it would not be scarce.
Note that scarcity applies to all resources, not just those used for luxury goods, and it always involves opportunity cost.
Conclude that saying a resource is scarce means it is limited and insufficient to satisfy all human desires, which is why choices must be made about how to allocate it.
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