Economic Scarcity, Opportunity Cost, n' stuff

Market Choices:

• go without certain goods and items

• look elsewhere for better deals

• pay the higher price

• choose something else

The decisions above are used by individuals experiencing

• returns.

• advantage.

• surplus.

• scarcity.

Explain how businesses use scarcity to their advantage.

• They can create artificial scarcity to drive up prices.

• They keep a large supply of items when demand is low.

• They create seasonal scarcity to alter their products.

• They can order low stocks to limit productive resources.

Dorian really needed a winter jacket, so she went to the mall. As she passed a skate shop, she saw some really cool shoes and a sweatshirt in the window. Although not as warm or practical, Dorian decided to get the sweatshirt since she knew none of her friends would have it.

The example above illustrates how people make choices based on

• supply and demand.

• loss and scarcity.

• income and taxes.

• wants and needs.

Dorian really needed a winter jacket, so she went to the mall. As she passed a skate shop, she saw some really cool shoes and a sweatshirt in the window. Although not as warm or practical, Dorian decided to get the sweatshirt since she knew none of her friends would have it.

Identify the opportunity cost involved in Dorian's decision.

• winter jacket

• sweatshirt

• friends

• new shoes

The manager of El Ray's Taco Shack decides to throw a party for his workers to show his appreciation for their hard work. The cost of the party exceeds his budget, and he is forced to make some business decisions the following month.

Which is the most likely opportunity cost facing the manager?

• He must offer more benefits to employees.

• He must hire another hard-working employee.

• He must put off the purchase of supplies.

• He must organize a different office party.

What is the definition of scarcity?

• limited wants, unlimited resources

• unlimited wants, unlimited resources

• limited wants, limited resources

• unlimited wants, limited resources

What is the definition of opportunity cost?

• The added cost when the level of some activity is raised by one unit

• Individual consumers and their decisions

• The value of the best forgone alternative

• The set of goods produced if all resources are used efficiently

The overall cost of producing goods and services usually decreases per unit as the quantity of units made increases. Which term is used to describe the cost of producing one more unit of output?

• fixed cost

• marginal cost

• total cost

• opportunity cost

When should sunk costs be considered in decision-making?

• In special circumstances determined by management

• Never

• Always

• When the business environment has changed

According to marginal analysis, optimal decision-making involves:

• Taking actions whenever the marginal benefit is positive.

• Taking actions only if the marginal cost is zero.

• Taking actions whenever the marginal benefit exceeds the marginal cost.

• All of the above.