Multiple Choice
Which of the following best describes the fundamental problem of economics?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following best describes the difference between scarcity and shortage?
A
Scarcity is a temporary condition, while shortage is a permanent condition.
B
Scarcity and shortage both mean that resources are unlimited.
C
Scarcity occurs only in developing countries, while shortage occurs in developed countries.
D
Scarcity refers to the limited nature of resources, while shortage refers to a situation where the quantity demanded exceeds the quantity supplied at a given price.
Verified step by step guidance1
Step 1: Understand the concept of scarcity. Scarcity refers to the fundamental economic problem that resources are limited while human wants are unlimited. This means that scarcity is a permanent condition affecting all economies because resources like time, money, labor, and raw materials are finite.
Step 2: Understand the concept of shortage. A shortage occurs when, at a given price, the quantity demanded of a good or service exceeds the quantity supplied. This is usually a temporary condition caused by market imbalances such as price controls, sudden demand spikes, or supply disruptions.
Step 3: Compare scarcity and shortage. Scarcity is about the inherent limited availability of resources in general, while shortage is a specific market situation related to supply and demand at a particular price point.
Step 4: Recognize that scarcity is a permanent and universal economic problem, whereas shortages are temporary and can be resolved by changes in price or supply conditions.
Step 5: Conclude that the best description differentiates scarcity as the limited nature of resources overall, and shortage as a market condition where demand exceeds supply at a given price.
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