Multiple Choice
If goods or services are scarce, which of the following must occur?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
What is the likely impact on an economy if it fails to address the three fundamental questions of economics (what to produce, how to produce, and for whom to produce)?
A
Scarcity will be eliminated and all wants will be satisfied.
B
The economy will automatically achieve maximum efficiency without any intervention.
C
Prices will remain constant regardless of resource allocation.
D
Resources will be allocated inefficiently, leading to unmet needs and wasted resources.
Verified step by step guidance1
Understand the three fundamental questions of economics: (1) What to produce? (2) How to produce? and (3) For whom to produce? These questions address the allocation of scarce resources in an economy.
Recognize that scarcity means resources are limited, so choices must be made about how to use them efficiently to satisfy wants and needs.
Analyze what happens if these questions are not addressed: without deciding what goods and services to produce, resources may be wasted on unwanted products.
Consider the production method: without deciding how to produce, resources might be used inefficiently, increasing costs and reducing output.
Think about distribution: if it is unclear for whom goods are produced, some individuals may not receive necessary goods, leading to unmet needs and inefficiency in the economy.
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