Scarcity and opportunity cost represent two interlinking concepts in economics as companies must often choose among scarce resources. The Economic Problem: Scarcity and Choice #1 ... • Opportunity cost is that which we give up or forgo, when we make a decision or a choice. The opportunity cost of the decision to invest in stock is the value of the interest. 2. The concepts of scarcity and opportunity cost play a very important role in managerial decision making. Social Studies. 78% average accuracy. Scarcity causes price. 34 Chapter 2/Scarcity and Choice: The Economic Problem 42. 1. 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. Scarcity and Opportunity Cost The Economic Problem True or False 9._____We have a limited amount resources but there is an endless amount of needs and wants 10._____Because of the economic problem, people and governments don’t have to make many decisions in how best to deal with the scarcity. Scarcity and opportunity cost are interlinking concepts. 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. 3. 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. It is always studied with reference to human unlimited wants with the means or the resources are limited. ... John can write two essays or construct one presentation. ... C. opportunity costs are zero when the production of bread increases. But all resources are not equally scarce all the time. Scarcity is the root cause of all economic problems therefore it is central to all economic decisions. Wants are unlimited, the total resources of a society including natural resources, human resources, capital goods and entrepreneurship are limited resulting in scarcity. D. all goods are free. Definitely, resources are scarce. 12th grade. According to the theory of competitive advantage, specialization and free trade will benefit all trading parties, even those that may Suppose that in the land of Plenty there is no scarcity. 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. (opportunity) cost of not going to the prom, including the lost fun and experiences that come with going to the prom. 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