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.

Answer: (C)

Verified step by step guidance

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.