Scarcity occurs when needs and wants are unlimited and resources are limited.

• A. Scarcity
• B. Equilibrium price and quantity
• C. Demand
• D. Variable costs

Answer: (A)

Scarcity is the condition where wants and needs are unlimited while resources are finite. Because there aren’t enough resources to satisfy every desire, individuals and societies must make trade-offs and choices about what to produce, how to allocate resources, and what to prioritize. This persistent, universal problem underpins all economic decision-making and explains why efficiency and opportunity costs matter.

The other concepts describe related ideas but not the fundamental problem itself: equilibrium price and quantity refers to a market-clearing point at a given price; demand is the relationship showing how much people want at different prices; variable costs are costs that change with the level of production. They don’t capture the core reason decisions are needed in the first place.