IZITIVE You have not yet completed this question Chapter 1 F

IZITIVE You have not yet completed this question. Chapter 1: Five Foundations of Economics Page 7 1.2 What are five foundations of economics? Which items are among the five foundations of economics? : Correct Answer(s) opportunity cost the universal desire for money conditions of scarcity marginal thinking the principle that trade creates value Incorrect Answer(s

Solution

The following three factors belong to the five foundations of economics:

(1) Conditions of scarcity

Since resources are scarce, economics deals with the optimal and efficient allocation of resources.

(2) Opportunity cost

Scarcity makes a trade-off between alternatives, which is based on the principle of opportunity cost which is the benefit foregone by choosing one alternative over another.

(3) Marginal thinking

Economic decision making is based on marginal analysis.