Which of the following is the reason why every society needs to develop an economic system?

• A. Because economic systems guarantee equal income for everyone
• B. Because resources are scarce and societies must decide how to allocate them
• C. Because all societies have unlimited resources
• D. Because economic systems eliminate the need for government

Answer: (B)

Verified step by step guidance

1. Understand the concept of scarcity: In microeconomics, scarcity means that resources are limited while human wants are unlimited. This fundamental problem forces societies to make choices about how to use their resources efficiently.
2. Recognize the role of an economic system: An economic system is a structured way a society organizes the production, distribution, and consumption of goods and services to address the problem of scarcity.
3. Analyze why equal income is not guaranteed: Economic systems do not necessarily guarantee equal income; rather, they focus on allocating scarce resources effectively based on different principles (e.g., market forces, government planning).
4. Consider the incorrect options: Unlimited resources do not exist, so that option is invalid. Also, economic systems do not eliminate the need for government; governments often play a key role in regulating and guiding economic activity.
5. Conclude that the primary reason every society needs an economic system is to manage scarcity by deciding how to allocate limited resources among competing uses.