HW1 Multiple Choice in a market system, the allocation of scarce goods invoives
ID: 1133582 • Letter: H
Question
HW1 Multiple Choice in a market system, the allocation of scarce goods invoives the consideration of O identifying the possibility of professional advancement O the dollar cost of any good or service. 0 what must be sacrificed in using a resource for its next-best use 0 the time required to pursue an economic activity 10 points Suppose a city block was going to be used for a parking lot in both New York City and a smal town. The opportunity cost would be O lower in a small city because the alternative uses of the city block are more varied O greater in a small city because the alternative uses of the city biock are more valuable. O greater in New York City because the altemative uses of the block are more valuable. O lower in New York City because the alternative uses of the city block are more variecd
Explanation / Answer
Question 1
Human wants are unlimited but the resources or goods to satisfy such wants are limited.
Thus, there is scarcity of goods and this compels the economy to make choice.
Also, scarce goods have alternative uses. So, using scarce goods for one use means sacrificing its other uses. This calls for considering the alternative uses as well while deciding the use of a scarce good for a particular purpose.
So, in a market system, the allocation of scarce goods involve the consideration of what must be sacrificed in using a resource for its next best use.
Hence, the correct answer is the option (3).
Value of piece of land would be much higher in New York City in comparison to a small town.
This means that if a piece of land is used for parking lot in the New York City then the alternative use of such land would be more valuable in comparison to the utilization of similar piece of land in a small town.
Higher the value of alternative uses, higher would be the opportunity cost.
So,
The opportunity cost would be greater in New York City because the alternative uses of the block are more valuable.
Hence, the correct answer is the option (3).
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