The fundamental problem of economics is: a. The law of increasing opportunity co

Question

The fundamental problem of economics is: a. The law of increasing opportunity costs. b. The scarcity of resources relative to human wants. c. How to get government to operate efficiently. d. How to create employment for everyone. Opportunity cost can best be defined as the a. money cost of a good or service. b. money cost plus interest on money borrowed to buy a good or service. c. cost of the resources used to produce a good or service. d. value of the best alternative foregone when the alternative at hand is chosen.

Explanation / Answer

• The fundamental problem of economics is scarcity of resources relative to human needs. It defines that human wants are unlimited and the economy has limited resources to fulfill them. This scarcity gives the economy incentive to take decision about what to produce, how to produce and for whom to produce.

Answer- option B

• Opportunity cost is the cost of missed opportunity from choosing one particular task. In other words it is the value of best alternative forgone when the other alternative is chosen.

Answer- option D

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