A civil servant receiving a fixed monthly salary constructs a scale of preference to allocate limited financial resources. Based on economic principles of urgency and relative importance of wants, arrange the following spending needs in order of priority from highest priority (most urgent) to lowest priority (least urgent).
- 1Purchase of essential food items for monthly household consumption
- 2Payment of residential house rent due for the month
- 3Payment of children's school tuition fees for the upcoming academic term
- 4Acquisition of a designer wristwatch for social events
Answer
The correct order of priority from highest to lowest is: Purchase of essential food items for monthly household consumption, Payment of residential house rent due for the month, Payment of children's school tuition fees for the upcoming academic term, and Acquisition of a designer wristwatch for social events.
A scale of preference is a list of unsatisfied wants arranged in order of relative importance and urgency. A rational economic agent prioritizes basic physiological survival needs (food) first, followed by essential shelter (rent), critical family investments (education), and finally non-essential luxury goods (designer wristwatch).
Step-by-Step Solution
Key Concept
Scale of Preference