Why do we study economics?

• A. To predict the stock market with certainty
• B. To eliminate scarcity from society
• C. To understand how scarce resources are allocated to satisfy unlimited wants
• D. To learn how to maximize profits in all situations

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the fundamental problem economics addresses, which is scarcity — the condition where resources are limited while human wants are unlimited.
2. Step 2: Recognize that economics studies how individuals, firms, and societies make choices to allocate these scarce resources efficiently.
3. Step 3: Note that economics is not about predicting specific outcomes like the stock market with certainty, as it deals with human behavior and market dynamics that are often uncertain.
4. Step 4: Understand that economics does not aim to eliminate scarcity, as scarcity is a natural condition, but rather to manage it through allocation and trade-offs.
5. Step 5: Conclude that the primary purpose of studying economics is to understand how scarce resources are allocated to satisfy unlimited wants, which helps in making informed decisions at various levels.