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7. Explain the relationship between scarcity and opportunity cost.

7. Explain the relationship between scarcity and opportunity cost.

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Opportunity cost means the cost of not putting resources to alternative use. Resources are scarce means resources are limited. The economy faces the central problem that makes a choice among alternative use of resources. Wealth is our resource to meet the want of human welfare. We need to sacrifice the next best services at the cost of buying the best one because of limited resources.

For an example, I have $100 and I have to choose to buy a book or buying a movie ticket and I can not buy both because of the scarcity of resources.

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