Which of the following best describes economics and its importance?

• A. Economics focuses only on the financial markets and how to make profits from investments.
• B. Economics is the study of natural sciences and their influence on technological development.
• C. Economics is the study of how individuals and societies allocate scarce resources to satisfy unlimited wants, helping us understand decision-making and resource management.
• D. Economics is primarily concerned with the study of historical events and their impact on modern society.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of economics. Economics is a social science that studies how individuals and societies make choices about allocating scarce resources to satisfy their unlimited wants.
2. Step 2: Recognize that economics is not limited to financial markets or profit-making; it encompasses a broader analysis of decision-making and resource management in various contexts.
3. Step 3: Differentiate economics from natural sciences, which focus on physical and biological phenomena, and from history, which studies past events and their impacts.
4. Step 4: Identify that the core importance of economics lies in its ability to explain how scarce resources are distributed and used efficiently to meet the needs and desires of people.
5. Step 5: Conclude that the best description of economics is the one emphasizing the study of allocation of scarce resources and understanding decision-making processes in individuals and societies.