#1.1 The Fundamental Economic Problem

Scarcity exists because resources are limited while human wants are unlimited.

Needs and wants are the same because both are essential for survival.

Opportunity cost refers to the cost of production in monetary terms only.

Governments do not face opportunity costs because they have access to taxation revenue.

Scarcity forces individuals, firms, and governments to make choices about resource allocation.

Economic growth can completely eliminate the problem of scarcity.

The fundamental economic problem leads to the need to decide what, how, and for whom to produce.

Wants are static and do not change over time.

Opportunity cost applies only to individuals and not to firms or governments.

A country must always prioritize military production over consumer goods.

The scale of preference varies among individuals due to different influences such as income and culture.

Using cheap labor is the only way to maximize resource use in production.

Needs include food, shelter, and clothing, which are necessary for survival.

A society that produces more capital goods today will have more consumer goods in the present.

Economic decisions are only made by governments, not individuals or firms.

The redistribution of income through taxation is one way governments address inequality.

The problem of scarcity affects all economies, regardless of their level of development.

Opportunity cost is relevant only when money is involved in a decision.

Governments play no role in deciding for whom to produce.

Economic choices involve trade-offs, meaning that choosing one option results in giving up another.