Why Does the Problem of Scarcity Exist

question 105

Multiple Choice

Why does the problem of scarcity exist?

• A) because resources are limited relative to wants
• B) because governments fail to intervene in the market place
• C) because resources are unlimited relative to wants
• D) because the world has many poor people

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Definitions:

Doomsday Machine

A hypothetical device or concept often associated with nuclear warfare, designed to automatically trigger an apocalyptic retaliation if a certain attack is detected.

Spurious Information

Information that appears to be valid and relevant to a decision or analysis but is actually false and misleading.

Negative Framing Effect

A psychological phenomenon where people make decisions based on the presentation of negative outcomes rather than positive ones, even when both presentations convey the same information.

Smooth Consumption

A concept in economics where individuals prefer to have a stable consumption pattern over time, smoothing out the highs and lows in their spending and consumption.