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Explain the link between scarcity and each of the following:
i. choice,
ii. op...
Oct 30, 2023
Explain the link between scarcity and each of the following:
i. choice,
ii. opportunity cost,
iii. the need for a rationing device,
iv. competition.
answer:
i. The link between scarcity and choice is that scarcity forces individuals and societies to make choices about how to allocate limited resources to fulfill their unlimited wants and needs.
Key Concept
Scarcity and Choice
Explanation
Scarcity refers to the limited availability of resources compared to the unlimited wants and needs of individuals and societies. This scarcity necessitates making choices about how to allocate these limited resources.
answer:
ii. The link between scarcity and opportunity cost is that scarcity requires individuals and societies to make trade-offs and incur opportunity costs when choosing between alternative uses of limited resources.
Key Concept
Scarcity and Opportunity Cost
Explanation
Opportunity cost refers to the value of the next best alternative foregone when making a choice. Scarcity forces individuals and societies to make trade-offs and incur opportunity costs because they cannot have everything they desire due to limited resources.
answer:
iii. The link between scarcity and the need for a rationing device is that scarcity necessitates the use of a rationing device to allocate limited resources among competing individuals or groups.
Key Concept
Scarcity and Rationing Device
Explanation
A rationing device is a mechanism used to allocate scarce resources among competing individuals or groups. Scarcity creates the need for a rationing device because there are more wants and needs than available resources, and a fair and efficient allocation method is required.
answer:
iv. The link between scarcity and competition is that scarcity creates competition among individuals and firms for limited resources, leading to efforts to gain a larger share of those resources.
Key Concept
Scarcity and Competition
Explanation
Scarcity creates competition as individuals and firms compete for limited resources. This competition can drive innovation, efficiency, and productivity as individuals and firms strive to gain a larger share of the scarce resources available.Howdoesscarcityimpacttheconceptofchoiceinmicroeconomics?,Generatemeasimilarquestion© 2023 AskSia.AI all rights reserved