Why do all economic decisions involve trade offs?

Why do all economic decisions involve trade offs?

Every decision involves trade-offs because every choice you want results in picking it over something else. Opportunity cost means choosing the better one of two ideas. There will always be an alternative; what could have happened instead. Describe how people make decisions by thinking at the margin.

What are three examples that illustrate how all decisions involve trade offs?

There are three examples that show how decisions involve trade offs. Individuals and trade offs: you choose to spend more time at work, you give up watching movie. Business and trade offs: farmers that plant broccoli cannot use that land to grow cauliflower.

Which of the following is a sign of a strong economy?

A low unemployment rate is a sign of a strong economy, and a high unemployment rate is a sign of a weak economy.

Which is an example of an economic shortage?

For example, demand for a new automobile that a manufacturer cannot fulfill. – Decrease in supply — occurs when the supply of a good drops. For example, a virus among pigs means many of them must be euthanized, creating a shortage of pork products.

What are the three possible solutions to a shortage?

The best solution to a shortage is to slowly raise the price of the good to the market equilibrium price. The other solutions are to decrease demand, or to increase supply by improving technology/boosting productivity.

How shortage and surplus affect the economy?

A Market Surplus occurs when there is excess supply- that is quantity supplied is greater than quantity demanded. In this situation, some producers won’t be able to sell all their goods. A Market Shortage occurs when there is excess demand- that is quantity demanded is greater than quantity supplied.

What happens in a surplus?

A surplus, also called excess supply, occurs when the supply of a good exceeds demand for that good at a specific price. Note that a surplus occurs at prices above the equilibrium price. Firms tend to have sales when they have surpluses, which increases the amount of quantity demanded through lower prices.

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