1, 50,000. Share Your PDF File Try our expert-verified textbook solutions with step-by-step explanations. It is important to learn to make good economic choices, or decisions. Opportunity costs arise because resources are limited. Someone says that it is Rs. Answers: 2 on a question: Scarcity and Opportunity Cost Fill in the blank We must make because all resources are, yet we have wants and needs. In other words, a full employment economy is always faced with the problem of choice: it must give up some units of one commodity to get more of the other. move the production possibilities curve UP and to the RIGHT. 15,000 and that of a car is Rs. Comments. The same amount of resources could alternatively be used to produce one mini-computer. Answer and Explanation: The correct answer is C. exists because of limited resources. Scarcity enforces the existence of opportunity cost. Principles of Microeconomics Award Winning Support. The problem arises because of three characteristics of a modern economic society: This is the starting point of any economic analysis. b) I c) III only. … We have been a customer experience innovator since the beginning, and it just keeps getting better. The third characteristic, in conjunction with the problem of scarcity, gives rise to the basic need for choice. If we decide and choose which want to satisfy with the available resource, then there are other wants we have to leave unsatisfied. Suppose, an economy is oper­ating near the full employment level. For example, certain amounts of land, labour, power and capital are required to produce, say, 25 pocket calculators. Unlimited Wants – everyone wants more (more is better than less) CHOICES must be made The choices can be made by Prices, Governments Opportunity Cost – the value of the next best alternative forgone Opportunity costs arise because of SCARCITY. The most desirable thing we give up is called the cost. Opportunity cost is positive when producing more of good requires taking resources away from producing another good. You have to know what else you could buy by spending the same amount of money. Since resources are limited, every time you make a choice about how to use them, you are also choosing to forego other options. Thus, the sacrifice made in producing the mini-computer is 25 pocket calculators. If there were an official slogan for the concept of opportunity cost, it would be, “There is no such thing as a free lunch.” The usual meaning of the slogan is that there are strings attached But, there would be need to transfer equipment from some other use. What is opportunity cost? C) the cost of going to the movie is greater for the one who had more choices to do other things. Smart on June 19, 2020: What is the importance of opportunity cost to West African Countries. If they do not get such work they have to remain idle due to the absence of alternative employment opportunities outside agriculture. Specifically, if it raises production of one product, the opportunity cost of making the next unit rises. TOS4. Production of a good is influenced by household income and consumer preference. • Because resources are scarce, the opportunity cost of every investment in capital is forgone present consumption. O A. Society’s choice problem may be presented as follows: How to allocate limited resources among competing uses? In general, opportunity cost of a resource is zero only when there is general unemployment of resources, including manpower. [E] the monetary costs of … II. 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