3.1.1.4 Scarcity and choice NOTES

What is the fundamental economic problem?

• Lack of technological advancement

• Scarcity due to limited resources and unlimited wants

• Overproduction in industrial sectors

• Inequality in wealth distribution

Which of the following is NOT a factor of production?

• Entrepreneurship

• Technology

• Labour

• Capital

What does the term 'opportunity cost' refer to?

• The price of raw materials

• The cost of producing goods

• The value of the next best alternative foregone

• The total expenses in a business

Which resource is described as being limited by population size and skill level?

• Entrepreneurship

• Capital

• Labour

• Land

What does specialization in the context of economics refer to?

• Increasing the number of employees

• Reducing costs of production

• Focusing on a narrow range of goods or services

• Diversifying products in a market

What is a characteristic of economic goods?

• They can be freely traded without cost

• They are abundant and free

• They have no opportunity cost

• They are scarce and have utility

What does a free market economy primarily rely on to allocate resources?

• Community needs

• Price mechanism

• Government decisions

• Central planning

Which of the following best describes the division of labour?

• Increasing the number of tasks a worker performs

• Equal work distribution among employees

• Breaking down production into separate tasks

• A method to reduce labour costs

What is the primary cause of scarcity?

• Government regulations

• Limited resources and unlimited wants

• Limited wants and needs

• Unlimited resources

Which of the following is an example of a free good?

• Pharmaceuticals

• Smartphones

• Solar energy

• Petroleum