ECON 1200 Test #1 Review . What is the concept of scarcity? How does it result i
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ECON 1200 Test #1 Review . What is the concept of scarcity? How does it result in the need for economic decision-making? 2. Explain the ideas of utility and marginal benefit? How would these influence decisions when making vacation travel plans? What are the 3 types of resources? What is opportunity cost? Give one example. Production Possibilities Frontier: Graph the following data on a production possibilities frontier curve. Scenario Beds 5. 75 10 20 72 58 28 40 a. What is the opportunity cost of increasing the production of beds from 30 to 40 b What would be happening if the firm were producing 40 beds and 40 sofas? d.What would you say about a combination of 30 sofas and 70 beds? 6 What are externalities? How might these effects influence government decisions to regulate a market. Use examples. 7. Graph the supply and demand curves for the following schedule. Identify the equilibrium quantity and price. If the industry becomes more efficient and doubles productivity, graph the new supply and demand after the productivity increase and identify the new equilibrium Quantity Quantity Price Demanded Supplied $1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 100 ECON 1200/1201 Test 1 Review Page 1 of3Explanation / Answer
1. Scarcity is the economic concept that states that society has unlimited human wants and needs but the economy doesn't have enough resources to fulfill those needs as productive resources are scarce, limited and insufficient to achieve the desired human needs.
As the word 'scarcity' suggests human beings have unlimited wants but limited resources, therefore it helps in decision making process by forcing us to make rational choices. It also helps the producers making the decision with what to produce, how much to produce, for whom to produce! Every decision has opportunity cost and for consumers, making these decisions depends upon their mindset as there always exists trade-off between current and future spending.
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