Scarcity, choice and the allocation of resources Flashcards
1
Q
What is the fundamental economic problem?
A
Scarcity, which arises because resources are limited while wants are unlimited.
2
Q
What does scarcity require in terms of resource allocation?
A
Scarcity means choices must be made about how to allocate limited resources between competing uses.
3
Q
What is opportunity cost?
A
The value of the next best alternative that is foregone when a choice is made.
4
Q
How does opportunity cost relate to economic choices?
A
Every choice has an opportunity cost because choosing one option means giving up others.
