Which of the following is most essential for a strong economy according to the three key economic ideas?

• A. Strict price controls on goods and services
• B. Complete elimination of unemployment
• C. Efficient use of scarce resources
• D. High levels of government spending

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the three key economic ideas, which are: (1) People face trade-offs, (2) The cost of something is what you give up to get it (opportunity cost), and (3) Rational people think at the margin. These ideas emphasize making choices given scarcity.
2. Step 2: Recognize that a strong economy depends on how well scarce resources are allocated and used, since resources like labor, capital, and raw materials are limited.
3. Step 3: Evaluate each option in the context of these ideas: strict price controls can distort markets, complete elimination of unemployment is unrealistic, and high government spending does not guarantee efficient resource use.
4. Step 4: Identify that the most essential factor is the efficient use of scarce resources, as it aligns with the fundamental economic principle of making the best possible use of limited inputs to maximize output and welfare.
5. Step 5: Conclude that efficient resource allocation leads to higher productivity and economic growth, which are key to a strong economy according to the core economic ideas.