Which economic principle refers to the need to make choices due to limited resources?

Which economic principle refers to the need to make choices due to limited resources?

• A. Principal of supply and demand
• B. Opportunity cost
• C. Marginal utility
• D. Comparative advantage

Answer: (B)

The economic principle that refers to the need to make choices due to limited resources is opportunity cost. This concept highlights that in any decision-making process, when resources are scarce, choosing one option inherently involves giving up another. Essentially, opportunity cost represents the value of the next best alternative that is forgone when making a choice. This principle is crucial in economics because it helps individuals and businesses evaluate the trade-offs involved in their decisions, allowing for more informed choices given their limited resources. The other principles mentioned, while related to economics, do not specifically address the core idea of making choices due to scarcity. The principle of supply and demand focuses on how prices are determined in a market based on the availability of goods and consumer desire. Marginal utility pertains to the additional satisfaction gained from consuming one more unit of a good or service, and comparative advantage deals with the ability of a party to produce a good at a lower opportunity cost than another, emphasizing efficiency in trade rather than the direct implications of resource limitations.

The economic principle that refers to the need to make choices due to limited resources is opportunity cost. This concept highlights that in any decision-making process, when resources are scarce, choosing one option inherently involves giving up another. Essentially, opportunity cost represents the value of the next best alternative that is forgone when making a choice. This principle is crucial in economics because it helps individuals and businesses evaluate the trade-offs involved in their decisions, allowing for more informed choices given their limited resources.

The other principles mentioned, while related to economics, do not specifically address the core idea of making choices due to scarcity. The principle of supply and demand focuses on how prices are determined in a market based on the availability of goods and consumer desire. Marginal utility pertains to the additional satisfaction gained from consuming one more unit of a good or service, and comparative advantage deals with the ability of a party to produce a good at a lower opportunity cost than another, emphasizing efficiency in trade rather than the direct implications of resource limitations.