Which situation best illustrates the concept of scarcity

Subject : Business

Question: Which situation best illustrates the concept of scarcity?

A) a class designing and selling calendars

B) a cook learning to be an executive chef

C) a friend buying a copy of a popular DVD

D) a person buying a used car due to limited income

Expert Verified Solution:

The correct answer is:

D) a person buying a used car due to limited income

Explanation:

Scarcity is an economic concept that refers to the limited availability of resources in comparison to the unlimited wants and needs of people. In the context of economics, scarcity forces individuals to make choices about how to allocate their limited resources, such as money, time, or materials.

Option D illustrates scarcity because it shows a person making a purchasing decision based on limited financial resources. The person’s limited income means they cannot afford a new car, so they choose to buy a used car instead. This is a direct example of scarcity, where the individual’s limited financial resources require them to make a choice and prioritize their spending.

Option A (a class designing and selling calendars) does not illustrate scarcity; it is more about entrepreneurial activity and creativity.

Option B (a cook learning to be an executive chef) is about personal development and career progression, not scarcity.

Option C (a friend buying a copy of a popular DVD) describes a typical consumer purchase, but it does not directly reflect scarcity unless there is additional context indicating that the friend has limited money or that the DVD is in limited supply.

Thus, D is the best option as it directly involves making a choice based on limited resources, which is the essence of scarcity.