A Level Economics AQA Practice Exam

What is a key characteristic of scarcity in economics?

1. Unlimited wants being met by unlimited resources

2. Limited resources available to satisfy unlimited wants

3. A situation where resources are plentiful

4. Efficient allocation of resources without competition

The correct answer is: Limited resources available to satisfy unlimited wants

Scarcity in economics is fundamentally defined by the imbalance between limited resources and unlimited wants. This principle highlights that while consumers and societies have extensive desires for goods and services, the resources to produce these goods and services are finite. The correct choice illustrates this concept by emphasizing that resources, such as land, labor, and capital, are constrained and cannot meet the infinite needs and desires of individuals and society at large. This imbalance drives the necessity for choices and trade-offs in resource allocation, as individuals and policymakers must decide how to use available resources most effectively to satisfy the most pressing wants. In contrast, the other options posit scenarios that are inconsistent with the economic definition of scarcity. They describe situations where resources are either abundant or capable of meeting all wants without limitations, which does not accurately reflect the reality faced in economic systems. Understanding scarcity is crucial as it forms the foundation for economic theory and decision-making.