Question

understanding scarcity
which of these statements demonstrate the economic concept of scarcity? choose four correct answers.
the wants and needs of
people are unlimited.
because of scarcity,
individuals must make
choices.
a large economy is able to
eliminate the effects of
scarcity.
everyone is able to meet
all their wants and needs.
all useful resources are
limited in their supply.
resources are scarce,
which explains why we are
willing to pay for them.

Explanation:

1. "The wants and needs of people are unlimited.": Scarcity exists because human wants/needs are infinite while resources are finite. This is a key part of the scarcity concept.
2. "Because of scarcity, individuals must make choices.": Scarcity forces people to choose how to allocate limited resources to satisfy their wants/needs.
3. "All useful resources are limited in their supply.": Scarcity is about limited resources (like land, labor, capital) relative to unlimited wants. Limited supply of resources is a core aspect.
4. "Resources are scarce, which explains why we are willing to pay for them.": Scarce resources have value (hence people pay), as their limited availability makes them desirable.

Incorrect options:

• "Everyone is able to meet all their wants and needs." is wrong because scarcity means not everyone can meet all wants/needs.
• "A large economy is able to eliminate the effects of scarcity." is wrong because scarcity is a fundamental economic problem that no economy (regardless of size) can eliminate.

Answer:

• The wants and needs of people are unlimited.
• Because of scarcity, individuals must make choices.
• All useful resources are limited in their supply.
• Resources are scarce, which explains why we are willing to pay for them.