Why are resource availability and allocation important concerns for governments in the context of scarcity and choice?

• A. Because governments do not need to consider resource availability when making policy decisions.
• B. Because unlimited resources allow governments to satisfy all wants without making choices.
• C. Because resources are limited, governments must decide how to allocate them to maximize social welfare.
• D. Because resource allocation is only relevant for private businesses, not governments.

Answer: (C)

Verified step by step guidance

1. Understand the concept of scarcity: Resources are limited, meaning there are not enough resources to satisfy all wants and needs. This fundamental economic problem forces choices to be made.
2. Recognize that governments face scarcity just like individuals and businesses, so they must prioritize how to use limited resources effectively.
3. Learn that resource allocation refers to the process of deciding how to distribute scarce resources among competing uses to achieve the best possible outcomes.
4. Realize that governments aim to allocate resources in a way that maximizes social welfare, which means improving the overall well-being of society.
5. Conclude that because resources are limited, governments must carefully consider availability and allocation to make informed policy decisions that balance competing needs and promote efficient use of resources.