Florida Teacher Certification Examinations (FTCE) Social Science Practice Test

What concept describes the allocation of scarce resources among competing uses?

1. Market equilibrium

2. Opportunity cost

3. Supply chain management

4. Market share

The correct answer is: Opportunity cost

The concept that describes the allocation of scarce resources among competing uses is opportunity cost. This principle highlights the idea that when resources are limited, choosing one option often requires forgoing another. In any decision-making process, the opportunity cost represents the benefits that could have been gained by choosing the next best alternative. For example, if a government decides to spend money on education instead of healthcare, the opportunity cost is the potential health benefits that could have been achieved with the funds allocated to healthcare. This emphasizes the importance of considering what is sacrificed in order to pursue a particular choice, thereby guiding effective resource allocation. Market equilibrium, on the other hand, refers to the state where supply equals demand, which is a different concept focused on determining prices and quantities in the market rather than resource allocation among competing uses. Supply chain management deals with overseeing the flow of goods and services, which does not directly address the concept of resource allocation between competing needs. Market share relates to the portion of a market controlled by a particular company or product, rather than the broader principle of resource allocation.