Scarcity drives economic choices Steps:

• Define the basic economic problem as scarcity: unlimited wants meet limited resources, requiring trade-offs.
• Identify oil as a finite natural resource with limited supplies.
• Recognize the tension: increasing supply needs exploration, but it risks environmental harm, forcing choices.
• Link to economics: this illustrates allocating scarce resources amid competing priorities.

Why A is correct:

• The basic economic problem is scarcity (limited resources vs. unlimited wants), and oil's finiteness directly exemplifies this core principle.

Why the others are wrong:

• B: Demand and supply explain market dynamics but not the root scarcity issue.
• C: Costs and supply address production factors, missing the fundamental resource limitation.
• D: External costs highlight market inefficiencies, not the basic problem of scarcity.

Final answer: A