Scarcity exists because of:

• A. limited resources and unlimited wants
• B. efficient allocation of resources
• C. unlimited resources and limited wants
• D. government intervention in markets

Answer: (A)

Verified step by step guidance

1. Understand the concept of scarcity in microeconomics: Scarcity arises because resources are limited while human wants are unlimited.
2. Analyze each option by comparing it to the definition of scarcity:
3. Option 1: 'limited resources and unlimited wants' aligns with the fundamental cause of scarcity.
4. Option 2: 'efficient allocation of resources' is a way to manage scarcity, not the cause of it.
5. Option 3 and 4: 'unlimited resources and limited wants' and 'government intervention in markets' do not describe scarcity correctly.