All societies face a trade-off for every decision for which of the following reasons?
A Most decisions have Zero Opportunity Costs.
B All resources are Scarce.
C Some resources are always unemployed.
D Most resources have no alternative uses.
E Most resources are not allocated efficiently.
The correct answer and explanation is:
The correct answer is B: All resources are scarce.
Explanation:
In economics, scarcity is a fundamental concept. It refers to the fact that resources, such as land, labor, capital, and entrepreneurship, are limited, while human wants are virtually unlimited. This imbalance creates a situation where societies must make choices about how to allocate resources effectively.
Because all resources are scarce, societies face trade-offs in decision-making. When choosing to allocate resources in one way, the opportunity cost is the value of the next best alternative that is forgone. For example, if a government decides to spend money on building roads, the trade-off might be that less money is available for healthcare or education. This trade-off arises because there are limited resources (money, labor, time) and they cannot be used for every possible need or want.
Scarcity means that society cannot have everything it desires. Individuals, businesses, and governments are constantly making decisions about how to allocate their scarce resources to best meet their needs and desires. These decisions often involve sacrifices, as the resources that are used for one purpose cannot be used for another. This is why every decision in economics involves a trade-off.
In contrast, the other options presented are not the key reasons for the trade-offs:
- A: Opportunity costs are never zero because there is always some alternative use for resources.
- C: Resources may sometimes be unemployed, but unemployment does not directly explain the trade-off in decision-making.
- D: Most resources do have alternative uses, which is why trade-offs are necessary.
- E: Resources may not always be efficiently allocated, but inefficiency itself doesn’t explain why trade-offs exist in every decision.
Therefore, the trade-off exists because resources are scarce, and choosing one option usually means forgoing another valuable opportunity.