In the context of resource allocation, what does the term 'scarcity' imply?

Practice Questions

Q1
In the context of resource allocation, what does the term 'scarcity' imply?
  1. Resources are abundant and easily accessible.
  2. There is a limited supply of resources relative to demand.
  3. Resources can be allocated without any constraints.
  4. All resources are equally valuable in every context.

Questions & Step-by-Step Solutions

In the context of resource allocation, what does the term 'scarcity' imply?
  • Step 1: Understand what resources are. Resources can be anything that people use to satisfy their needs and wants, like money, time, food, and materials.
  • Step 2: Recognize that scarcity means there is not enough of these resources to meet everyone's needs and wants.
  • Step 3: Realize that when demand for resources is higher than the available supply, it creates a situation of scarcity.
  • Step 4: Conclude that scarcity forces people to make choices about how to allocate their limited resources.
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