Econ Past paperII 2005 Q.1

A: Scarcity doesn't mean we have not enough of eveerything. There exists something which is limited in supply but yet is sufficient in quantity to satisfy all our wants for it at zero (full) price. So no one is willing to pay a (full) price on it and thus this good is a free good.

B: In scarcity, wants are unlimited only in the sense of comparing our wants to limited resources.

C: Eonomic good means we are willing to pay a positive (full) price for it, including money and non-money price. For example, some free-of-charge gifts dispatched on the street have a zero money price, but people are willing to pay the time cost in lining up to get the gifts. So this kind of gift, thoguh with zero money price, is an economic good and implies the existence of scarcity.

D. When there is scarcity, our resources are not enough to satisfy all our wants. So we have to make choice on what wants to satisfy and what wants to give up. Whenever there is something to sacrifice cost is implied.