Which situation best illustrates the concept of scarcity?

• A. A person receives a gift with no restrictions on how it can be used.
• B. A farmer harvests crops from a field that produces more than enough food for everyone in the community.
• C. A student must choose between spending time studying for an exam or working a part-time job because there is not enough time to do both.
• D. A store offers unlimited free samples of a product to every customer.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of scarcity in microeconomics. Scarcity refers to the fundamental economic problem of having limited resources to satisfy unlimited wants and needs. It means that choices must be made because resources (like time, money, or goods) are limited.
2. Step 2: Analyze each situation to see if it involves limited resources forcing a choice. For example, receiving a gift with no restrictions implies no limitation on usage, so scarcity is not illustrated here.
3. Step 3: Consider the farmer harvesting crops that produce more than enough food. Since the supply exceeds demand, there is no scarcity in this scenario.
4. Step 4: Look at the student who must choose between studying and working because there is not enough time to do both. Time is a limited resource here, so the student faces a trade-off, which is a direct illustration of scarcity.
5. Step 5: Evaluate the store offering unlimited free samples. Since the samples are unlimited, there is no scarcity involved in this case.