Which of the following best describes scarcity?

• A. The ability to produce all goods and services without any opportunity cost.
• B. The situation where resources are distributed equally among all individuals.
• C. The condition in which unlimited wants exceed limited resources.
• D. The existence of abundant resources to satisfy all human wants.

Answer: (C)

Verified step by step guidance

1. Understand the concept of scarcity in microeconomics: Scarcity refers to the fundamental economic problem that arises because resources are limited while human wants are unlimited.
2. Recognize that scarcity implies a trade-off, meaning that because resources are limited, producing or consuming more of one good or service means giving up some amount of another (opportunity cost).
3. Evaluate each option by comparing it to the definition of scarcity: For example, 'the ability to produce all goods and services without any opportunity cost' contradicts scarcity because scarcity implies opportunity costs exist.
4. Identify that 'the condition in which unlimited wants exceed limited resources' captures the essence of scarcity, as it highlights the imbalance between infinite desires and finite means.
5. Conclude that scarcity is not about equal distribution or abundance of resources, but about the limited availability of resources relative to unlimited wants.