Practice question · Multiple choice
Air is free but bottled water is not, and both are water or gas we cannot live without. What makes one an economic good?
Hints
- Ask whether your breathing leaves less air for anyone else.
- Is clean air free in every city?
Show the answer
C. That consuming it deprives someone else
Why
Scarcity is contextual. Clean air is a free good where it is abundant and an economic one where it is not, which is exactly what an emissions permit prices.
Practise Scarcity
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More questions on Scarcity
- Sort each resource into its classical factor of production.
- Match each of the three economic questions to a real decision.
- Why does scarcity apply even to a billionaire?
- A country discovers vast oil reserves and its citizens still face trade-offs. Which reading of scarcity does…
- Which statements correctly describe scarcity?
- Anything scarce enough to command a positive price is by definition an economic good.
- Order the logical chain from scarcity to prices.