Scarcity causes price. In most cases, economic resources are not completely available at all times in unlimited numbers, so companies must make a choice about which resources to use during production. 27 times. Suppose that in the land of Plenty there is no scarcity. Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice". The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments. E. both c and d are correct. Scarcity and opportunity cost are interlinking concepts. Scarcity is the root cause of all economic problems therefore it is central to all economic decisions. ... John can write two essays or construct one presentation. (opportunity) cost of not going to the prom, including the lost fun and experiences that come with going to the prom. 3. The concepts of scarcity and opportunity cost play a very important role in managerial decision making. 12th grade. Social Studies. Economics Review Chapter 1 Scarcity and Opportunity Costs DRAFT. scarcity. Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice". ANSWER T, M, A 43. According to the principle of increasing costs, as the production of one good expands, the opportunity cost of producing another unit of the good tends to increase. According to the theory of competitive advantage, specialization and free trade will benefit all trading parties, even those that may 78% average accuracy. D. all goods are free. 1. The opportunity cost of the decision to invest in stock is the value of the interest. Scarcity is the root cause of economic problem: Scarcity is a relative concept. 2. Definitely, resources are scarce. Scarcity, Opportunity Costs, and Basic Economic Questions. 34 Chapter 2/Scarcity and Choice: The Economic Problem 42. It is always studied with reference to human unlimited wants with the means or the resources are limited. But all resources are not equally scarce all the time. answer choices . ... C. opportunity costs are zero when the production of bread increases. If a city decides to build a hospital on vacant land it owns, the opportunity cost is the value of the benefits forgone of the next best thing which might have been done with the land and construction funds instead. 8 months ago ... What is the most basic problem of economics? The negative slope of a production possibilities frontier is a graphic representation of opportunity cost. Wants are unlimited, the total resources of a society including natural resources, human resources, capital goods and entrepreneurship are limited resulting in scarcity. 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