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Scarcity, Choice and Opportunity Cost: Question 6

Syllabus 1.1, 1.2

Multiple choice AS 1 mark

A hospital has only a limited number of intensive care unit (ICU) beds available on any given day. When the number of patients needing critical care exceeds the number of free beds, doctors must use medical triage criteria, such as how likely each patient is to survive with treatment and how urgently they need it, to decide which patients are treated first.

Economists describe every economy, and every institution within it, as having to answer three basic questions because of scarcity, what to produce, how to produce it, and for whom to produce it.

Which basic economic question is being answered by the hospital's decision about which specific patients receive its scarce ICU beds today?

Choose an answer to check it, then compare with the worked solution below.
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Worked solution

Step 1: Recall the three basic economic questions

Because resources are scarce relative to wants, every economy, and every organisation within it, must answer three basic questions: what to produce, how to produce it, and for whom to produce it. “For whom” refers specifically to how output that has already been decided upon and produced is then distributed among the people who might want it.

Step 2: Apply this to the hospital’s triage decision

The hospital has already decided to run an ICU (what to produce) and has already decided on its staffing and equipment mix (how to produce it). The decision doctors face today, given more patients need care than there are free beds, is which specific patients actually receive the scarce treatment that is already being provided. That is a decision about for whom the intensive care is produced.

Step 3: Rule out the other options

  • Option A describes what to produce (the earlier choice to run an ICU service at all), not today’s allocation decision.
  • Option B describes how to produce (the staffing and equipment mix), which is a separate decision from who receives treatment.
  • Option D treats “how much” as if it were a fourth basic economic question. Cambridge economics recognises only three basic questions (what, how and for whom) so this is not a valid category on its own.

Final answer

The triage decision allocates an already-provided, scarce service among competing patients, so it answers the question of for whom to produce, option C.