One of the reasons that a country needs an economic system is because it

• A. wants to eliminate all forms of scarcity
• B. does not need to make choices about production and consumption
• C. must decide how to allocate scarce resources among competing uses
• D. can produce unlimited goods and services without constraints

Answer: (C)

Verified step by step guidance

1. Understand the concept of scarcity in economics: Scarcity means that resources are limited while human wants are unlimited, so choices must be made about how to use these resources.
2. Recognize that an economic system is a method or structure a country uses to decide how to allocate its limited resources efficiently among various competing uses.
3. Eliminate incorrect options by analyzing their feasibility: For example, a country cannot eliminate scarcity entirely or produce unlimited goods without constraints because resources are finite.
4. Focus on the key role of an economic system, which is to make decisions about production and consumption given the scarcity of resources.
5. Conclude that the correct understanding is that a country must decide how to allocate scarce resources among competing uses, which is why an economic system is necessary.