The nature of the economic problem

Which option best explains the problem of scarcity?

Feb/March 2018

The economic problem means that people are forced to make choices. In Bulgaria, over the past few years, spending patterns have changed. The Bulgarian government wants people to spend more, and it is trying to prevent deflation from returning while also making sure the country continues to see output growth.

Feb/March 2019

What leads economic agents to make decisions?

Feb/March 2024

When deciding how resources are allocated within an economy, there are three key questions to resolve. Which option is not part of one of the three key questions?

Feb/March 2025

If the price of oil is to be lowered, extra supplies are required. However, in 2013, opponents resisted efforts to investigate new sites because exploration could lead to environmental damage. How does this demonstrate the basic economic problem?

May/June 2015

What does the basic economic problem mean?

May/June 2015

Water is a scarce resource in Singapore because the island’s limited geographical area leaves very little land from which to gather water for its $4.8$ million people. Which method would be least successful in dealing with its water scarcity?

May/June 2015

What is the clearest example of the existence of the economic problem?

May/June 2016

Bank deposits in Dubai climbed by 40% in 2013. An increasing number of financial companies are choosing to locate in Dubai. Expansion in its financial sector is being matched by horizontal mergers among financial companies and by workers becoming more specialised. The economy is getting wealthier, but the economic problem will never be eliminated here or anywhere else in the world.

May/June 2016

Countries must decide how to allocate their scarce resources. In some countries, a larger share of these resources is being directed towards tourism. However, many jobs in this sector are low-paid and provide little security. For instance, the average age of people working in hotels is quite young, even though some older employees have spent their whole working lives in the hotel industry.

May/June 2016

Which pair of terms provides the general definition of the economic problem?

May/June 2017

What causes the economic problem experienced by every country?

May/June 2018

In economics, natural sunlight is regarded as a free good. Why is this the case?

May/June 2018

In economics textbooks, scarcity is presented as the main economic problem. Why does scarcity count as a problem?

May/June 2018

Governments in low-income countries often permit foreign multinational companies (MNCs) to extract minerals within their countries. Which trade-off between benefit and cost could this create for the low-income countries?

May/June 2022

Give one example of a free good.

May/June 2022

What leads to scarcity in an economy?

May/June 2023

What forms part of the economic definition of scarcity?

May/June 2023

GDP per capita in Switzerland is high. Why do Swiss citizens still encounter the basic economic problem?

May/June 2023

What does the term free good mean?

May/June 2024

Why is scarcity bound to exist forever?

May/June 2024

How may the economic problem be described?

May/June 2024

Which three key questions determine resource allocation?

May/June 2024

In Poland, people use both free goods and economic goods. In 2020, demand rose in Poland for economic goods as well as factors of production. For instance, Polish consumers wanted more football shirts, and the Polish government increased spending on housing for the country’s population.

May/June 2024

Once a fishing village, Shenzhen is now among China’s wealthiest cities and has a large secondary sector. This change was made possible because nearby villages pooled resources to improve their area. For instance, they built new housing to rent to migrants who work in the city’s factories. Even so, housing supply has not kept pace with demand, so the government is now imposing a maximum price on housing.

May/June 2024

Space missions beyond Earth confront the same fundamental economic problem as those on Earth. The African Space Agency was set up to strengthen science and technology across Africa. It also seeks to coordinate trade among African countries so as to support technological development. This could improve domestic markets. In 2021, total government spending on this agency exceeded $500 million.

May/June 2025

Why does choice form an important part of the basic economic problem?

Oct/Nov 2015

Mexico, Indonesia, Nigeria and Turkey, called the Mints, are four emerging economies forecast to expand quickly. These four countries have fairly large populations, ranging from 75 million in Turkey to 242 million in Indonesia in 2014. Their birth rates are also high, varying from 17 in Turkey to 41.5 in Nigeria per 1000 people. Both income per head and the countries’ Human Development Index ranking are rising. However, these changes do not mean that all people in the four countries are content. As incomes rise, so do people’s wants, and what people would like to consume is greater than the maximum output the countries are able to produce. Output and consumption are rising in each of the four countries. Nigeria, for instance, is expected to rank among the world’s 20 largest economies by 2020. Productivity is increasing in most parts of the Nigerian economy, although it is still low in agriculture. Even with some security worries, more multinational companies are establishing themselves in the country because they are attracted by its growing markets. Nigeria and Turkey both recorded annual inflation rates above 8% in 2014. Indonesia’s was 5.7% and Mexico’s 5.2%. In that year, the Mexican Government used monetary policy measures to hold inflation down. In August 2014 it opened its energy market, letting private sector firms compete with the country’s state-owned petroleum firm. It also raised spending on state-provided health care, which works alongside private medical care. The four countries experienced exchange rate changes in 2014. Indonesia’s currency, the rupiah, moved from 10 685 per US$ the previous year to 11 450 per US$ in 2014. Turkey’s currency, the Turkish Lira, showed a similar pattern. Exchange rate changes can influence firms’ production costs, just as industrial action can. In June 2014 Turkish trade unions arranged several strikes in an attempt to secure better wages and working conditions for their members. However, Turkish trade unions have limited power because of restrictive trade union laws and low membership, with only 9% of workers in trade unions. As a result, collective bargaining is not a major feature of Turkish labour markets and Turkish trade unions have little influence on economic policy.

Oct/Nov 2016

What is the fundamental problem confronting all economies?

Oct/Nov 2018

What do economies seek to achieve when they address the economic problem of scarcity?

Oct/Nov 2018

What indicates that a finite resource is limited?

Oct/Nov 2019

What is the fundamental economic problem?

Oct/Nov 2020

What makes economic agents choose?

Oct/Nov 2020

Why must consumers choose how to spend their income?

Oct/Nov 2020

To bring down the price of oil, additional supplies are required. However, opponents reject exploring new sites because of the environmental harm this could cause. Explain why this is an example of the basic economic problem?

Oct/Nov 2021

Helium is a scarce gas because it needs thousands of years to form. The US government owns 35% of the world’s supply of helium and has been selling its reserves. Helium is needed for medical scanners. It is also put into party balloons, which is a wasteful alternative use of a valuable resource. Which two concepts fit this statement?

Oct/Nov 2021

To bring down the price of oil, extra supplies are required. However, those who object are against searching for new locations because of the environmental harm this could create. Why is this an example of the basic economic problem?

Oct/Nov 2021

To bring down the price of oil, additional supplies are required. However, those who object are against the exploration of new locations because of the environmental harm it might create. Why does this statement illustrate the basic economic problem?

Oct/Nov 2021

Helium is a gas in limited supply because it needs thousands of years to form. The US government controls $35\%$ of the world supply of helium and has been selling off its stocks. Helium is vital for medical scanners. It is also used in party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement?

Oct/Nov 2021

Economists refer to resources as being ‘scarce’. What has to result from scarce resources?

Oct/Nov 2023

A small country that exports only oil decides to cut the speed at which it is taking out its finite oil reserves by a large amount. What is the most likely explanation for this decision?

Oct/Nov 2023

A consumer has $10 available to spend. A meal is priced at $9 and a drink is priced at $5. Which term would describe the situation if the consumer does not have enough money to buy both the meal and the drink?

Oct/Nov 2023

Which economic question is least likely to arise because of scarcity?

Oct/Nov 2024

What is causing the economic problem in the global gold market?

Oct/Nov 2024

Consumers and producers both have the same difficulty of meeting wants. What is the most likely reason that wants cannot be fully met?

Oct/Nov 2025