Question

The scenarios each illustrate a principle of economics. Classify each scenario according to the principle that best fits it.

a. On Black Friday, there are huge sales for electronics at many retail stores. David must decide between buying a camera at one store or a flat screen TV at another store, and buying one means losing out on the ability to purchase the other.
b. An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. The company compares how much adding another worker will improve the product to the additional cost.
c. Ava finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time.

1. Marginal Decisions
2. Resource Scarcity
3. Opportunity Cost

Answer 1

Answer:

3. Opportunity Cost

1. Marginal Decisions

2. Resource Scarcity

Explanation:

Opportunity cost or implicit is the cost of the next best option forgone when one alternative is chosen over other alternatives.

If David buys the camera he would forgo the opportunity to buy a tv and if he buys a tv, he forgoes the opportunity to buy a camera.

Marginal decisions look at the benefit of increasing or decreasing an input by little units. Here, the educational company is considering the marginal benefit of increasing the numbers of economist by one unit.

Ava has limited time to do all she would like to do. Time here is a scarce resource. Her wants her limited but the resources are scarce.