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In a scenario where a company has to choose between investing in marketing or pr

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Question: In a scenario where a company has to choose between investing in marketing or product development, which principle of resource allocation is being applied? (2023)

Options:

  1. Scarcity.
  2. Efficiency.
  3. Equity.
  4. Sustainability.

Correct Answer: Scarcity.

Exam Year: 2023

Solution: 

The principle of scarcity is applied when a company must choose between two competing investments due to limited resources, making option 0 correct.

In a scenario where a company has to choose between investing in marketing or pr

Practice Questions

Q1
In a scenario where a company has to choose between investing in marketing or product development, which principle of resource allocation is being applied? (2023)
  1. Scarcity.
  2. Efficiency.
  3. Equity.
  4. Sustainability.

Questions & Step-by-Step Solutions

In a scenario where a company has to choose between investing in marketing or product development, which principle of resource allocation is being applied? (2023)
  • Step 1: Understand that a company has limited resources, like money and time.
  • Step 2: Recognize that the company has two options: investing in marketing or product development.
  • Step 3: Realize that because the company can't afford to do both, it must make a choice.
  • Step 4: Identify that this situation is an example of scarcity, where resources are not enough to satisfy all wants.
  • Step 5: Conclude that the principle of scarcity is being applied when deciding between the two investments.
  • Principle of Scarcity – The principle of scarcity refers to the limited nature of resources, which forces individuals or organizations to make choices between competing alternatives.
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