Introduction to Business EconomicsMODULEQuestion 584 of 209
All Questions

Consider the following and decide which, if any, economy is without scarcity:

Options

AThe pre-independent Indian economy, where most people were farmers.
BA mythical economy where everybody is a billionaire.
CAny economy where income is distributed equally among its people.
DNone of the above.
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Correct Answer

✅ Option d — None of the above.

All Options:

  • AThe pre-independent Indian economy, where most people were farmers.
  • BA mythical economy where everybody is a billionaire.
  • CAny economy where income is distributed equally among its people.
  • DNone of the above.

Detailed Solution & Explanation

• Scarcity is a fundamental economic problem where unlimited human wants exceed the limited resources available to satisfy those wants. This applies to all economies, regardless of their wealth or distribution of resources. • Option (D) is the correct answer because no economy can ever be without scarcity. The core principle of economics is dealing with scarcity. Even if an economy has abundant resources, human wants are always expanding, leading to a continuous struggle to allocate those resources efficiently. • Let's look at why the other options are incorrect: • Option (A) The pre-independent Indian economy, where most people were farmers: This economy would definitely face scarcity. Farmers still have limited land, water, and tools, and their output might not be enough to satisfy everyone's needs and wants. Poverty and lack of resources are clear indicators of scarcity. • Option (B) A mythical economy where everybody is a billionaire: Even if everyone is a billionaire, scarcity would still exist. Money is just a medium of exchange; it doesn't create resources. There would still be a limited supply of desirable goods and services (e.g., beachfront properties, rare art, prime real estate, or even time). If everyone can afford everything, the demand for limited items would skyrocket, making them scarce. This highlights that scarcity is about the availability of *resources and goods*, not just money. • Option (C) Any economy where income is distributed equally among its people: Equal distribution of income doesn't eliminate scarcity. It only changes how the existing limited resources are shared. The total amount of goods and services produced would still be finite, and human wants would still be infinite. • In essence, scarcity is a universal economic problem that drives all economic decisions. It's not about poverty or wealth, but about the fundamental imbalance between unlimited desires and limited means.

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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