Introduction to Business EconomicsMODULEQuestion 581 of 209
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In Economics, we use the term scarcity to mean;

Options

AAbsolute scarcity and lack of resources in less developed countries.
BRelative scarcity i.e. scarcity in relation to the wants of the society.
CScarcity during times of business failure and natural calamities.
DScarcity caused on account of excessive consumption by the rich.
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Correct Answer

✅ Option b — Relative scarcity i.e. scarcity in relation to the wants of the society.

All Options:

  • AAbsolute scarcity and lack of resources in less developed countries.
  • BRelative scarcity i.e. scarcity in relation to the wants of the society.
  • CScarcity during times of business failure and natural calamities.
  • DScarcity caused on account of excessive consumption by the rich.

Detailed Solution & Explanation

• In Economics, scarcity is a fundamental concept. It refers to the basic economic problem of having seemingly unlimited human wants and needs in a world of limited resources. • The correct answer is (B) Relative scarcity i.e. scarcity in relation to the wants of the society. This option accurately captures the essence of scarcity in economics. Resources are considered scarce not because they are absolutely non-existent, but because they are insufficient to satisfy all human wants and needs. Our desires for goods and services always exceed the available means to produce them. • Option (A) Absolute scarcity and lack of resources in less developed countries is incorrect because scarcity is a universal problem, not limited to specific regions or levels of development. Even wealthy countries face scarcity because their wants still exceed their resources. • Option (D) Scarcity caused on account of excessive consumption by the rich is also incorrect. While unequal distribution of resources can exacerbate problems, the core economic concept of scarcity applies regardless of how resources are distributed. It's about the fundamental imbalance between unlimited wants and limited resources, not just how those resources are used by a particular group.

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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