Multiple Choice
In the context of scarcity and choice, what does it mean if you are wasting resources that would be better spent elsewhere?
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0. Basic Principles of Economics
Scarcity and Choice
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In a world of scarcity, which of the following is true?
A
Economic decisions are unnecessary.
B
Opportunity cost does not exist.
C
Resources are unlimited and all wants can be satisfied.
D
Individuals and societies must make choices about how to allocate limited resources.
Verified step by step guidance1
Understand the concept of scarcity in economics: Scarcity means that resources are limited while human wants are unlimited, which forces individuals and societies to make choices.
Recognize that because resources are limited, economic decisions are necessary to determine how to allocate these resources efficiently.
Recall the definition of opportunity cost: it is the value of the next best alternative foregone when a choice is made, which always exists in a world of scarcity.
Evaluate the given statements by comparing them to the principles of scarcity and opportunity cost to identify which one aligns with economic theory.
Conclude that the correct statement is that individuals and societies must make choices about how to allocate limited resources, reflecting the fundamental problem of scarcity.
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