What is the relationship between wants, resources, scarcity, and choices? Discuss the relationship for an individual and for a society
What will be an ideal response?
A person faces scarcity whenever his or her wants exceed what he or she can obtain using his or her resources. Because the person cannot fulfill all of his or her wants, the person is forced to choose which wants will be satisfied and which wants will remain unsatisfied. The same results hold true for a society. All societies face scarcity because people's wants are essentially infinite, so that the resources available are not sufficient to fulfill everyone's wants. Because of this fact, societies must make choices about which (and whose) wants will be satisfied and which (and whose) wants will remain unsatisfied.
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Real GDP is nominal GDP divided by the Consumer Price Index
Indicate whether the statement is true or false
Which of the following is not correct?
a. There is a greater reduction in risk by increasing the number of stocks in a portfolio from 1 to 10, than by increasing it from 100 to 120 stocks. b. The historical rate of return on stocks has been about 5 percentage points higher than the historical rate of return on bonds. c. Stock in an industry that is very sensitive to economic conditions is likely to have a higher average return than stock in an industry that is not so sensitive to economic conditions. d. If you had information about a corporation that no one else had, you could earn a very high rate of return. This contradicts the efficient market hypothesis.