Scarcity:
a. exists because resources are unlimited while human wants are limited.
b. means we are unable to have as much as we would like to have.
c. will likely be eliminated as technology continues to expand.
d. is not an issue addressed in economics.
b
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At each of the three points in the following graph, indicate whether planned aggregate expenditure is greater than, equal to, or less than GDP?
What will be an ideal response?
Inferior goods typically obey the law of demand because the substitution effect tends to dominate the income effect
a. True b. False
To raise the most tax revenue, governments should consider taxing goods whose
a. income elasticity of demand is high b. price elasticity of demand is low c. income elasticity of supply is low d. income elasticity of demand is high e. cross elasticity of demand is positive
Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:
A. as happy as possible, since he is already maximizing total utility. B. happier eating less pizza and playing more video games. C. happier eating more pizza and playing fewer video games. D. indifferent to which selection he makes.