Answer to Question #302741 in Macroeconomics for Yabu

Question

Define scarcity, choice and opportunity cost. Can you link them in your day to day lives?

Answer 1

• Scarcity is a situation where the demand for goods and services is higher than what suppliers are willing and able to bring to the market. For instance, there was a global vaccine shortage in the early days of vaccination for COVID-19.
• Choice is the ability of a consumer or supplier to choose which goods or service to buy or bring to the market. For instance, consumers often choose between traveling by bus or by airplane.
• Opportunity cost is the value of the next best alternative foregone in order to attain another good or service. For instance, opportunity cost done by most people is giving up luxury purchases to save and invest that money for better returns.