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O Levels Economics (2281)•2281/11/M/J/23
Question 1 from 2281/11/M/J/23

Explanation

Scarcity stems from unlimited wants versus limited resources

Steps:

  • Recall the economic definition: Scarcity occurs when resources are insufficient to satisfy all human desires.
  • Identify the core elements: Wants are endless, but resources like time, money, and materials are finite.
  • Evaluate options: Check which factor directly creates the imbalance leading to choices and trade-offs.
  • Select the match: The option highlighting endless desires fits the cause of scarcity.

Why D is correct:

  • Scarcity is defined in economics as the gap between unlimited human wants and limited resources, forcing prioritization and opportunity costs.

Why the others are wrong:

  • A: High employment boosts production but doesn't address the wants-resources mismatch.
  • B: High investment expands resources temporarily, yet wants remain unlimited.
  • C: Unlimited resources would eliminate scarcity, not cause it.

Final answer: D

Topic: The nature of the economic problem

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