Question

Which statement is truc? \((1 . \mathrm{O} 2,3)\) a) America has always had a shortage of entrepreneurs. b) Our cconomic problem is that we have limited resources available to satisfy relatively unlimited wants. c) America has less coonomic resources today than we had 40 years ago. d) Aside from a few million poor people, we have very little scarcity in the United States.

Short answer

The true statement is: b) Our economic problem is that we have limited resources available to satisfy relatively unlimited wants. This statement highlights the fundamental economic problem of scarcity, which arises due to the limited availability of resources and our seemingly unlimited human wants.

Step-by-step solution

Understanding the Statements

First, let's get an understanding of each statement: a) America has always had a shortage of entrepreneurs. b) Our economic problem is that we have limited resources available to satisfy relatively unlimited wants. c) America has less economic resources today than we had 40 years ago. d) Aside from a few million poor people, we have very little scarcity in the United States. Now, let's evaluate each option.

Evaluating Statement (a)

This statement suggests that America has consistently faced a lack of entrepreneurs. However, history shows us that this is incorrect. America has a long history of entrepreneurship, from Ford Motor Company to Apple Inc.

Evaluating Statement (b)

This statement refers to the fundamental economic problem of scarcity, which arises because of the limited availability of resources to satisfy human wants, which are seemingly unlimited. This is a basic principle in economics, and hence, a likely candidate for the correct answer.

Evaluating Statement (c)

This statement argues that America's economic resources have decreased over time. Although it's true that some resources have been used up, overall, the United States economy has grown significantly over the last 40 years. Factors such as technological advancements and global trade have contributed to this growth, making this statement false.

Evaluating Statement (d)

This statement suggests that scarcity is not much of a concern in the United States apart from its impact on poor people. However, scarcity is a fundamental concept in economics, and it affects everyone despite their income or social status. Even wealthy individuals and countries like the United States cannot fulfil all their limitless wants with the available resources. Hence, this statement is incorrect.

Identifying the Correct Statement

Considering all evaluations, we can conclude that the true statement is: b) Our economic problem is that we have limited resources available to satisfy relatively unlimited wants. This statement correctly addresses the basic economic problem of scarcity, as it acknowledges the limited availability of resources and our seemingly unlimited wants.

Key concepts

Economic Resources

Economic resources, often referred to as inputs or factors of production, are the foundation of any economy. They encompass all the inputs that help produce goods and services that are needed to satisfy various human wants. These resources can be broadly classified into four categories:

• Land: Includes all natural resources, such as minerals, forests, and water bodies.
• Labor: The human effort that is used in the creation of products and services.
• Capital: Not just money, but manufactured resources like machinery, buildings, and infrastructure utilized to produce goods.
• Entrepreneurship: The skill and innovation required to combine the other resources effectively and efficiently.

These resources are limited and finite, and that is why they cannot satisfy every human want. Each resource has its limits - for example, there is only so much land available, and the availability of skilled labor can vary greatly by region and country. Economic resources must be allocated optimally to prevent waste and maximize their usefulness in addressing societal needs.

Unlimited Wants

Unlimited wants refer to the insatiable desires and needs of humans for goods and services. No matter how much we have, there always seems to be something else we want or need. This is a universally accepted phenomenon in economics, as people constantly strive to improve their living standards.

Consider a simple example: if someone has a car, they might desire a larger or more luxurious one. If they have food, they might seek more variety or higher quality. This unending cycle of desires drives economies by creating continuous demand for goods and services.
The concept of unlimited wants highlights a key challenge in economics - resources are limited, but human wants are endless. It explains why economic systems are continuously evolving to find new ways to meet these ever-growing wants, through improvements in technology, better resource management, and innovative solutions.

Fundamental Economic Problem

The fundamental economic problem arises from the fact that resources are limited, while human wants and needs are virtually infinite. This situation leads to the core issue of scarcity.

Scarcity forces individuals, organizations, and governments to make important decisions about how to allocate resources. Multiple choices must be made regarding what to produce, how to produce it, and for whom to produce it. This leads to trade-offs, where choosing more of one good means having less of another.
In practical terms, this may mean deciding whether to allocate more resources to healthcare or education, or whether to prioritize cutting-edge technology over basic needs. Because of scarcity, prioritization and resource management become crucial, influencing policy and economic strategies.

Understanding scarcity and the fundamental economic problem is essential for anyone studying economics, as it provides the backdrop for various economic models, theories, and frameworks that economists use to analyze how economies function and evolve.