Which of the following best describes the basic economic problem?

• A. Production decisions are made without considering opportunity costs.
• B. Limited resources must be allocated among competing wants because human desires are unlimited.
• C. Prices always remain constant regardless of supply and demand.
• D. All resources are abundant and can satisfy every human want.

Answer: (B)

Verified step by step guidance

1. Understand that the basic economic problem arises because resources are scarce while human wants are unlimited.
2. Recognize that scarcity forces individuals and societies to make choices about how to allocate limited resources efficiently.
3. Identify that opportunity cost is a key concept here, representing the value of the next best alternative foregone when making a decision.
4. Evaluate each option by checking if it reflects scarcity, unlimited wants, and the need for allocation of resources.
5. Conclude that the statement 'Limited resources must be allocated among competing wants because human desires are unlimited' best captures the essence of the basic economic problem.