Which of the following statements about scarcity is true?

• A. Scarcity is not related to the concept of opportunity cost.
• B. Scarcity exists because resources are limited and wants are unlimited.
• C. Scarcity only affects poor countries and not wealthy ones.
• D. Scarcity can be completely eliminated through technological advancement.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of scarcity in microeconomics. Scarcity refers to the fundamental economic problem that arises because resources are limited while human wants are unlimited.
2. Step 2: Recognize that scarcity is directly related to opportunity cost. Because resources are scarce, choosing to allocate resources to one use means giving up the next best alternative, which is the opportunity cost.
3. Step 3: Evaluate the statement that scarcity only affects poor countries. Scarcity affects all economies, regardless of wealth, because resources are finite everywhere.
4. Step 4: Consider the claim that technological advancement can completely eliminate scarcity. While technology can alleviate scarcity by improving resource efficiency, it cannot fully eliminate scarcity because wants tend to grow and resources remain limited.
5. Step 5: Conclude that the true statement is: 'Scarcity exists because resources are limited and wants are unlimited,' as this captures the essence of scarcity in economics.