Introduction to Business EconomicsMTP Mar 18Question 585 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 had abundant resources, human wants are insatiable and will always expand to exceed what is available. • Let's look at why the other options are incorrect: • Option (A) The pre-independent Indian economy, where most people were farmers: This economy certainly faced scarcity. Farmers, like everyone else, had limited land, tools, and time, while their needs for food, shelter, and other goods were present. • Option (B) A mythical economy where everybody is a billionaire: Even if everyone were a billionaire, scarcity would still exist. Money is just a medium of exchange; it doesn't create resources. There would still be limited land, limited time, limited clean air, and limited unique goods and services. People's desires would simply shift to more exclusive or rare items, still creating a situation where wants outstrip available resources. • Option (C) Any economy where income is distributed equally among its people: Equal distribution of income addresses inequality, but it does not eliminate scarcity. The total amount of goods and services produced would still be limited by the available resources and technology, and human wants would still exceed that total. • Therefore, scarcity is an inherent characteristic of all economies, making "None of the above" the only logical answer.

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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