Introduction to Business EconomicsMTP Apr 19Question 575 of 209
All Questions

The law of scarcity

Options

Adoes not apply to rich developed countries
Bapplies only to the less developed countries
Cimplies that consumers wants will be satisfied in a socialistic system
Dimplies that consumers wants will never be completely satisfied
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Correct Answer

✅ Option d — implies that consumers wants will never be completely satisfied

All Options:

  • Adoes not apply to rich developed countries
  • Bapplies only to the less developed countries
  • Cimplies that consumers wants will be satisfied in a socialistic system
  • Dimplies that consumers wants will never be completely satisfied

Detailed Solution & Explanation

• The law of scarcity is a fundamental economic principle stating that human wants for goods, services, and resources exceed what is available. This means that resources are limited, but human desires are virtually unlimited. • Option (D) is correct because it accurately reflects the essence of scarcity. Since resources are finite and human wants are infinite, it's impossible to satisfy all consumer wants completely, regardless of the economic system or level of development. This inherent imbalance is the core of the scarcity problem. • Option (A) is incorrect because the law of scarcity applies universally. Even rich, developed countries face scarcity; they have to make choices about how to allocate their resources (e.g., healthcare vs. education, defense vs. infrastructure) because they cannot have everything. Their wants still exceed their available resources. • Option (B) is incorrect for the same reason as (A). Scarcity is not limited to less developed countries; it's a global economic reality. Every country, rich or poor, must deal with the problem of limited resources and unlimited wants. • Option (C) is incorrect. While a socialistic system aims to distribute resources more equitably, it does not eliminate scarcity. Resources are still limited, and choices still need to be made. No economic system can magically satisfy all consumer wants because the fundamental problem of scarcity persists.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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