Government policy shows trade-offs in resource allocation

Steps:

• Identify the policy: reallocating government spending from high-income to low-income regions to address poverty.
• Recognize the implication: increasing expenditure in one area requires reducing it elsewhere due to limited total budget.
• Link to economic concepts: this highlights the trade-off where choosing one option means forgoing another.
• Match to choices: the concept of forgoing alternatives fits opportunity cost.

Why C is correct:

• Opportunity cost is the value of the next best alternative forgone; here, reducing spending in high-income regions is the cost of prioritizing low-income areas.

Why the others are wrong:

• A: Market forces involve supply and demand driving outcomes, but this is deliberate government intervention.
• B: Economies of scale refer to cost reductions from increased production volume, unrelated to budget redistribution.
• D: Specialisation involves focusing on specific tasks or products for efficiency, not regional spending shifts.

Final answer: C