PRC-3 · Chapter 9 · Question 1 of 45
A national government must decide whether to allocate its limited annual budget towards building new public hospitals or upgrading military defense systems. This fundamental decision illustrates which core economic concept?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Scarcity and opportunity cost
Explanation
Because resources are scarce, society cannot have everything it wants. Choosing to allocate resources to one sector (healthcare) means sacrificing the next best alternative (defense), which is the opportunity cost.
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