Multiple Choice
Which of the following best describes the basic economic problem?
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0. Basic Principles of Economics
Scarcity and Choice
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Because of scarcity, every decision involves a:
A
trade-off
B
free good
C
surplus
D
market equilibrium
Verified step by step guidance1
Understand the concept of scarcity in economics: scarcity means that resources are limited while human wants are unlimited.
Recognize that because resources are limited, choosing one option means giving up another; this is the essence of a trade-off.
Define a trade-off as the need to sacrifice one thing to gain something else due to limited resources.
Contrast trade-off with other options: a free good is not scarce, surplus refers to excess supply, and market equilibrium is where supply equals demand.
Conclude that every decision involves a trade-off because scarcity forces individuals and societies to make choices between alternatives.
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