Question

Each scenario illustrates a principle of economics. Classify each scenario according to the principle that best fits it.

a. An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. The company compares how much adding another worker will improve the product to the additional cost.

b. Ava finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time.

c. On Black Friday, there are huge sales for electronics at many retailers. David must decide between buying a new iPhone or a new Apple watch.

WORD BANK
- opportunity cost
- marginal analysis
- resource scarcity

Answer 1

a. marginal analysis
b. resource scarcity
c. opportunity cost

Step-by-step explanation:

b.
As Ava does not have enough time to have dinner, exercise, and watch TV all at once, this suggests that she has limited time. like almost everything else, time is also a resource. this scenario hence proves Ava having a resource scarcity

c.
as David has to decide between buying a new iPhone or a new Apple watch, it suggests that he has to give one up to enjoy the other. opportunity cost is the next best alternative forgone. therefore this scenario showcases opportunity cost

a.
tbh, as there are 3 questions and 3 answers (assuming each can be used once and not be repeated) it is only rational for the answer to question (a) to be marginal analysis as the other two has been used up



hope this helps

Answer 2

a. marginal analysis
b. opportunity cost
c. resource scarcity

Because the company is considering adding another employee, and seeing if that would improve production despite the additional costs of hiring that employee, this is a tradeoff system that is marginal analysis. Marginal analysis is the examination of additional benefits of an activity compared to the additional costs incurred by that same activity.

For Ava, because there is not enough time for all of the activities after work, this is opportunity cost, which means the value of what you lose when you choose from one or more options. Basically its weighing what the pros and cons of each option is, then deciding based on that, despite losing the other pros from the other options.


Black Friday’s huge sales (and pretty much any retail/store) means they have a limited number of products, which is resource scarcity. David’s decision is between a low stock of one item and a low stock of another - because there is low stock (and even if there wasn’t) there is only a finite amount of the product, which means there is a scarcity for it.