Multiple Choice
Why do all societies face the problem of scarcity?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
How does opportunity cost vary when individuals or societies make choices under conditions of scarcity?
A
Opportunity cost is unrelated to the choices made under scarcity.
B
Opportunity cost decreases as more alternatives become available.
C
Opportunity cost increases as resources become scarcer and choices become more constrained.
D
Opportunity cost remains constant regardless of the level of scarcity.
Verified step by step guidance1
Understand the concept of scarcity: Scarcity means that resources are limited while human wants are unlimited, forcing individuals or societies to make choices about how to allocate these resources.
Define opportunity cost: Opportunity cost is the value of the next best alternative foregone when a choice is made. It represents the trade-off involved in decision-making under scarcity.
Analyze how opportunity cost changes with scarcity: When resources become scarcer, the choices available become more limited, so giving up one option means sacrificing more valuable alternatives, which increases the opportunity cost.
Contrast with other options: Recognize that opportunity cost does not remain constant or decrease with more alternatives; instead, it tends to increase as scarcity intensifies because the value of forgone alternatives rises.
Summarize the relationship: Therefore, opportunity cost increases as resources become scarcer and choices become more constrained, reflecting the higher value of what must be given up.
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