What is scarcity?

• A. A situation in which unlimited wants exceed the limited resources available to fulfill those wants.
• B. A temporary shortage of goods due to weather.
• C. A surplus of goods in a market.
• D. An increase in production costs.

Answer: (A)

Scarcity means unlimited wants exceed the limited resources available to satisfy them. Because resources like land, labor, and capital are finite, societies must make choices about what to produce, how to produce, and for whom. This leads to trade-offs and opportunity costs whenever resources are allocated. Scarcity is a constant condition in an economy and underpins how prices and markets help allocate resources efficiently. A temporary shortage caused by weather is not scarcity—it's a short-term imbalance in supply. A surplus is the opposite situation, and rising production costs affect supply decisions rather than define scarcity itself.