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Question

Difficulty: EasyScale of Preference

Match each economic action on the left with the corresponding basic economic concept it demonstrates on the right.

  • Arranging unsatisfied wants in descending order of priorityScale of preference
  • Selecting the most urgent item from a prioritized list of needsEconomic choice
  • Giving up the next best item on the list when a decision is madeOpportunity cost

Answer

Arranging wants in priority order matches with Scale of preference; selecting the top item matches with Economic choice; giving up the next best alternative matches with Opportunity cost.
A scale of preference ranks unsatisfied wants according to their urgency, allowing a consumer to make a choice. The alternative item that is given up as a result of that choice represents the opportunity cost.

Step-by-Step Solution

1
Identify the concept associated with ranking wants by importance.
Listing items according to urgency forms a scale of preference.
Consumers use a scale of preference to organize their desires before making spending decisions.
2
Identify the concept for picking a preferred item from the list.
Selecting the most pressing need is the act of economic choice.
Scarcity forces consumers to choose specific items over others.
3
Identify the concept for the sacrificed alternative.
The next best item forgone is the opportunity cost.
Opportunity cost is defined by the satisfaction sacrificed from the unchosen alternative.

Key Concept

Scale of Preference
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Topics

Scale of Preference

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