Understanding Scarcity and Opportunity Cost

What is the definition of scarcity in economics?

• The unlimited availability of resources

• The limited nature of society’s resources

• The overproduction of goods

• The absence of demand for goods

Which of the following best describes a shortage?

• When demand exceeds supply at a given price

• When supply exceeds demand at a given price

• When resources are unlimited

• When all needs are satisfied

What is opportunity cost?

• The cost of producing goods

• The value of the next best alternative forgone

• The total amount spent on all alternatives

• The profit made from a decision

Which of the following is an example of a trade-off?

• Choosing to study instead of going to a movie

• Buying both a car and a bike

• Having unlimited money to spend

• Not making any choices

Scarcity affects which of the following?

• Only poor countries

• Only individuals

• All societies and economies

• Only businesses

Which of the following is NOT a cause of shortages?

• Natural disasters

• Government price controls

• Unlimited resources

• Sudden increase in demand

How does scarcity differ from a shortage?

• Scarcity is temporary, shortage is permanent

• Scarcity is a permanent condition, shortage is temporary

• Scarcity only affects luxury goods

• There is no difference

Which of the following best illustrates opportunity cost?

• The money you spend on lunch

• The time you could have spent working instead of going to a concert

• The total cost of all your purchases

• The price of a movie ticket

If a country uses its resources to produce more military goods, what is the opportunity cost?

• More military goods

• Fewer consumer goods

• Lower prices

• Higher employment

A bakery can make either 100 loaves of bread or 50 cakes in a day. If it chooses to make 50 cakes, what is the opportunity cost?

• 50 cakes

• 100 loaves of bread

• 150 baked goods

• 50 loaves of bread