Chap 1 - Scarcity, choice and opportunity cost

The fundamental economic problem exists because:

• resources are scarce in relation to unlimited wants

• a business does not know how much it can sell

• resources are scarce in relation to needs.

• we cannot always have what we want.

Wants are unlimited because:

• there will always be something we would like to have.

• there will always be something we need.

• our income is limited.

• we are never aware of what we might want in the future

A teacher usually marks examination papers during the school break. She receives $900. Instead, this time, she has decided to do some maintenance work on her apartment. To get someone to do the work would cost $600.

What is the opportunity cost if the teacher decides to do the maintenance work herself rather than mark examination papers?

• $300

• $600

• $900

• $1500

Which of these questions is not one an economy has to address?

• how resources are used?

• for what resources are used?

• where resources are used?

• for whom resources are used?

A government has limited resources to fund the wants of its population. This means that:

• the government has to make choices.

• the government is unable to provide any goods free of charge.

• the government has to cut the pay of government workers.

• the government is unable to borrow more funds.