Multiple Choice
In microeconomics, the phrase 'other things held constant' is often used to indicate which of the following assumptions when analyzing scarcity and choice?
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0. Basic Principles of Economics
Scarcity and Choice
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Which of the following is NOT considered scarce according to the economic definition of scarcity?
A
Labor in a competitive job market
B
Clean air in a polluted city
C
Unlimited wants
D
Fresh water in a drought region
Verified step by step guidance1
Step 1: Understand the economic definition of scarcity. Scarcity means that a resource is limited in supply relative to the demand for it, so it is not freely available in unlimited quantities.
Step 2: Analyze each option to determine if it is scarce. For example, labor in a competitive job market is scarce because there is a limited number of workers relative to jobs.
Step 3: Consider clean air in a polluted city. Since pollution reduces the availability of clean air, it becomes limited and thus scarce.
Step 4: Evaluate fresh water in a drought region. Drought conditions reduce water supply, making fresh water scarce in that area.
Step 5: Identify unlimited wants. Wants are desires for goods and services that are unlimited by nature, meaning they are not scarce because they are not a resource but a demand. Therefore, unlimited wants are NOT considered scarce.
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