When economists speak of scarcity, they are referring to the
condition in which society is not employing all its resources in an efficient way.
condition in which people’s wants outstrip the limited resources available to satisfy those wants.
economic condition that exists in only very poor countries of the world.
condition in which society produces too many frivolous goods and not enough socially desirable goods.
The correct answer and explanation is :
Correct Answer:
Condition in which people’s wants outstrip the limited resources available to satisfy those wants.
Explanation:
Scarcity is one of the foundational concepts in economics. It refers to the fundamental economic problem of having seemingly unlimited human wants in a world with limited resources. This mismatch between what people want and the resources available to satisfy those wants is what economists mean when they talk about scarcity.
In every society, whether wealthy or poor, there are limited resources—such as land, labor, capital, and entrepreneurship—available to produce goods and services. However, people’s desires and needs are virtually endless. People want food, clothing, shelter, education, healthcare, entertainment, and many other goods and services. Because the resources to produce all of these are finite, not all wants can be satisfied.
Scarcity does not mean that there is a shortage of a particular good at a specific time. Rather, it is a permanent and universal condition that forces individuals and societies to make choices. These choices involve deciding how to allocate resources efficiently—what to produce, how to produce, and for whom to produce.
For instance, if a society uses a large amount of its labor and capital to produce luxury cars, it may have fewer resources left to produce affordable housing or public transportation. Because of scarcity, every choice has an opportunity cost—the value of the next best alternative foregone.
The other options in the question are incorrect because:
- Inefficient use of resources relates to inefficiency, not scarcity.
- Scarcity is not unique to poor countries—even the richest countries must deal with limited resources.
- Producing frivolous versus desirable goods is a question of value judgment and allocation, not the basic definition of scarcity.
Thus, scarcity is the driving force behind the need for economics—it compels us to prioritize and make rational decisions about resource use.