Three claims about scarcity

Scarcity means wants outrun the resources available to meet them. Test each statement against that idea.

Statement I says resources have more possible uses than can all be met at once. That is the definition itself, so it is true.

Statement II says decisions have to be made about which use a resource goes to. That is the other side of the same coin: because every use cannot be covered, someone has to choose, and every choice has an opportunity cost. True.

Statement III says scarcity would vanish if people wanted to help others instead of themselves. It would not. Generous people still want more food, housing and medicine for others than the available land, labor and capital can produce. The motive behind the wants does not change how many resources exist.

So I and II are correct and III is not.

Each choice

• A. Statement I is right, but stopping there misses that II says the same thing from the decision side. If uses outnumber resources, choosing among them is unavoidable.
• B. Statement II is right, but so is I. A student who sees I as a separate idea from scarcity, rather than its definition, ends up here.
• C. This treats scarcity as a matter of selfishness. Scarcity comes from limited resources, and wants on behalf of other people are just as unlimited as wants for yourself.
• D (correct). I defines scarcity and II states the choice it forces; III fails because generosity does not add resources.
• E. Including III means believing that changing people's motives could end scarcity. Even an economy of pure altruists has to choose how to use limited resources.