How does the study of economics depend upon the phenomenon of scarcity?
Because economics is the study of how society allocates its scarce resources, if there were no scarcity, there would be no need for economics. Everyone could have all the goods and services they wanted. No one would have to make decisions based on tradeoffs, because there would be no opportunity cost associated with the decision. (It is difficult to conceive of a situation where time is not scarce, however).
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A point inside a production possibilities frontier
A) could indicate that some resources are unemployed. B) is unattainable. C) is more efficient than points on the production possibilities frontier. D) implies that too much capital and not enough labor are being used.
Moral hazard typically occurs because
A) people are dishonest. B) agreements sometimes create incentives that are costly to monitor. C) workers possess diminishing marginal productivity. D) workers possess adverse selection.
Which of the following is true with regard to minimum wages? a. A minimum wage does little to alleviate poverty
b. A minimum wage helps deal with the problem of poverty. c. A minimum wage leads to a surplus or unemployment in the skilled labor market. d. A minimum wage adversely affects the unskilled laborers between the age group 40 and 45. e. A minimum wage helps provide employment to teenagers and improve their standard of living.
A price elasticity of demand for a good or service of 1.8 tells us that:
A. the price rises by 1.8 percent when quantity demanded falls by 1 percent. B. quantity demanded falls by 1.8 percent when price rises by 1 percent. C. quantity demanded falls by 1.8 units when price changes by $1. D. the price changes by $1.80 when quantity changes by 1 unit.