A Level Economics AQA Practice Exam

What is an economic good?

1. Goods that are free and plentiful for all

2. Things that are scarce and involve opportunity cost

3. Products that can be produced without any cost

4. Items that have no market value

The correct answer is: Things that are scarce and involve opportunity cost

An economic good is defined as something that is scarce, meaning it is limited in availability, and involves opportunity cost, which is the cost of choosing one option over another. This scarcity creates a demand for the good, as consumers are willing to pay for something that is not readily available to everyone. The notion of opportunity cost emphasizes that resources are finite and when one resource is used for one purpose, it cannot be used for another, thus highlighting the trade-offs involved in economic decision-making. For instance, if a society has to choose between producing more healthcare services or investing in education, the resources allocated to one area reduce the potential output in another. This illustrates how economic goods are linked to the concepts of scarcity and opportunity cost, making option B the accurate depiction of what an economic good is.