Which statement best describes the impact of scarcity?

• A. Scarcity eliminates the need for trade-offs in decision-making.
• B. Scarcity forces individuals and societies to make choices about how to allocate limited resources.
• C. Scarcity only affects consumers, not producers or governments.
• D. Scarcity allows unlimited production of goods and services without any opportunity cost.

Answer: (B)

Verified step by step guidance

1. Understand the concept of scarcity: Scarcity means that resources are limited while human wants are unlimited, which creates a fundamental economic problem.
2. Recognize that because resources are limited, individuals and societies cannot have everything they want, so they must make choices about how to allocate these resources efficiently.
3. Identify that making choices due to scarcity involves trade-offs, meaning choosing one option requires giving up another, which introduces the concept of opportunity cost.
4. Note that scarcity affects all economic agents—consumers, producers, and governments—because all face limited resources and must prioritize their decisions.
5. Conclude that scarcity does not eliminate trade-offs or opportunity costs, nor does it allow unlimited production; instead, it forces decision-makers to allocate resources wisely.