A Level Economics AQA Practice Exam

How are limited resources defined in an economic context?

1. A situation where every desire is fulfilled

2. The abundance of all goods available

3. The scarcity of resources to meet all wants and needs

4. The availability of optimal production methods

The correct answer is: The scarcity of resources to meet all wants and needs

In economics, limited resources are defined as the scarcity of resources to meet all wants and needs. This concept is foundational to the study of economics because it highlights the fundamental problem of scarcity, which arises because human wants are virtually unlimited while the means to satisfy those wants are limited. This scarcity necessitates the allocation of resources, making it imperative for societies to make choices about what to produce, how to produce, and for whom to produce. In essence, the limitations imposed by scarce resources mean that not all desires can be satisfied, leading to trade-offs and opportunity costs in decision-making processes. The other choices do not accurately capture the essence of limited resources. A situation where every desire is fulfilled or an abundance of all goods available contradicts the very definition of scarcity. Additionally, while the availability of optimal production methods may enhance efficiency, it does not directly address the issue of resource limitation. Therefore, the correct definition revolves around understanding the scarcity of resources in relation to the needs and wants of individuals and societies.