Which of the following statements best describes the study of economics?

• A. Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants.
• B. Economics is the study of government policies and political systems.
• C. Economics is the study of physical and biological processes in nature.
• D. Economics is the study of how to maximize profits in business organizations.

Answer: (A)

Verified step by step guidance

1. Understand that economics is fundamentally concerned with the problem of scarcity, which means resources are limited while human wants are unlimited.
2. Recognize that economics studies how individuals and societies make choices to allocate these scarce resources efficiently to satisfy as many wants as possible.
3. Identify that economics is broader than just government policies or political systems, although these can be part of economic analysis.
4. Note that economics is distinct from natural sciences like biology or physics, which study physical and biological processes.
5. Acknowledge that while economics can analyze profit maximization in businesses, it is not limited to this; it encompasses all decision-making related to resource allocation.