Understanding Basic Economic Concepts

define scarcity

• Scarcity is the economic principle that all resources are infinite.

• Scarcity is the condition where resources are limited and cannot meet all human wants.

• Scarcity refers to an abundance of resources available to meet human wants.

• Scarcity is the situation where resources are evenly distributed among all individuals.

How does scarcity lead to choice?

• Scarcity allows individuals to have unlimited resources.

• Scarcity leads to choice by forcing individuals to prioritize their limited resources among competing wants.

• Scarcity encourages people to ignore their wants and needs.

• Scarcity eliminates the need for choice altogether.

Define opportunity cost in your own words.

• Opportunity cost is the amount of money spent on a chosen option.

• Opportunity cost is the value of the best alternative that is not chosen when a decision is made.

• Opportunity cost refers to the time taken to make a decision.

• Opportunity cost is the total cost incurred when making a decision.

Give an example of opportunity cost in daily life.

• Choosing to watch TV instead of studying for an exam.

• Opting to take a nap instead of finishing a work project.

• Deciding to read a book instead of playing video games.

• Choosing to eat lunch instead of going for a run.

What are the four factors of production?

• Finance, Resources, Labor, Production

• Raw Materials, Services, Trade, Innovation

• Water, Technology, Management, Marketing

• Land, Labor, Capital, Entrepreneurship

How does land contribute to production?

• Land is only useful for housing and urban development.

• Land contributes to production by providing space, resources, and ecosystem services essential for agriculture and industry.

• Land does not play a role in industrial production.

• Land is primarily used for recreational purposes.

What role does labor play in the economy?

• Labor plays a crucial role in the economy by providing the workforce needed for production and services.

• Labor is solely responsible for economic recessions.

• Labor has no impact on technological advancements.

• Labor is only important in agricultural sectors.

Explain the importance of capital in production.

• Capital is crucial in production as it enables the acquisition of resources and technology necessary for efficient production processes.

• Capital is primarily used for marketing and sales strategies.

• Capital has no impact on the quality of goods produced.

• Capital is only necessary for large-scale production.

What is entrepreneurship?

• Entrepreneurship is the process of working for someone else.

• Entrepreneurship refers to managing a large corporation.

• Entrepreneurship is only about inventing new products.

• Entrepreneurship is the act of starting and running a new business to make a profit.

Describe the law of supply.

• The law of supply indicates that higher prices result in lower quantities supplied.

• The law of supply indicates that higher prices lead to higher quantities supplied.

• The law of supply suggests that supply is independent of price changes.

• The law of supply states that lower prices lead to lower quantities supplied.