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CHAPTER 1 WHAT IS ECONOMICS?
􀂄 Essay Questions
Topic: Scarcity
Skill: Recognition
1) What do economists mean when they discuss
¡°scarcity¡±?
Answer: Scarcity occurs whenever people¡¯s wants
exceed the ability of the available resources to
meet these wants. Because people¡¯s wants are effectively
infinite¡ªit is always possible to imagine
more good things to want to have¡ªwants will
always exceed what can be produced with the
available resources, and so scarcity will always be
present.
Topic: Scarcity
Skill: Conceptual
2) What is the relationship between wants, factors of
production, scarcity, and choices? Discuss the relationship
for an individual and for a society.
Answer: A person faces scarcity whenever his or her
wants exceed what he or she can obtain using his
or her resources. Because the person cannot fulfill
all of his or her wants, the person is forced to
choose which wants will be satisfied and which
wants will remain unsatisfied. The same results
hold true for a society. All societies face scarcity
because people¡¯s wants are essentially infinite, so
that the factors of production available are not
sufficient to fulfill everyone¡¯s wants. Because of
this fact, societies must make choices about which
(and whose) wants will be satisfied and which
(and whose) wants will remain unsatisfied.
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