A government designates a fixed area of 500,000 500,000\,500,000 hectares of land exclusively for forestry conservation, thereby preventing any commercial property development on this land.
Which of the following statements best describes the economic consequences of this decision?
The fundamental economic problem of land scarcity has been resolved by prioritizing environmental welfare over commercial profits.
State intervention is the only economic mechanism capable of eliminating the opportunity cost of resource allocation.
The opportunity cost of conserving the forestry is the forgone economic value and utility that would have been generated by commercial property development.
Commercial property development on this land would have completely eliminated the scarcity of land in the long run.
123 exam-style questions on AQA A Level Economics 1.1 Economic methodology and the economic problem, covering 1.1.1 Economic methodology, 1.1.2 The nature and purpose of economic activity, 1.1.3 Economic resources, 1.1.4 Scarcity, choice and the allocation of resources, and 1.1.5 Production possibility diagrams. Each one has a worked solution and a mark scheme showing where the marks go.