In economics, which of the following best describes the concept of scarcity?

• A. Unlimited resources and limited wants
• B. Limited resources and unlimited wants
• C. Only luxury goods are scarce
• D. Resources and wants are always equal

Answer: (B)

Verified step by step guidance

1. Understand the definition of scarcity in economics: Scarcity refers to the fundamental economic problem of having limited resources to meet unlimited wants and needs.
2. Analyze each option by comparing it to the definition of scarcity:
3. Option 1: 'Unlimited resources and limited wants' contradicts scarcity because scarcity arises from limited resources, not unlimited ones.
4. Option 2: 'Limited resources and unlimited wants' aligns perfectly with the concept of scarcity, as resources are finite while human desires are infinite.
5. Option 3 and 4: 'Only luxury goods are scarce' and 'Resources and wants are always equal' are incorrect because scarcity applies to all resources and wants are generally not equal to resources.