Which statement best defines scarcity in economic terms?

• A. Scarcity means limited resources with unlimited wants
• B. Scarcity means abundance of all resources
• C. Scarcity means resources are free
• D. Scarcity only affects one person

Answer: (A)

Scarcity means resources are finite while people’s wants are unlimited. Because there aren’t enough resources to satisfy every desire, choices have to be made about what to produce, how to use resources, and who gets the goods. This is why prices, tradeoffs, and opportunity costs appear in economics—the cost of one option is what you give up to get it.

The statement that best captures this is that resources are limited and wants are unlimited. The other ideas miss the essential point: abundance or freedom from cost would remove scarcity, and scarcity isn’t a problem only for one person—it affects everyone because resources like time, labor, land, and capital are limited for all.