What is defined as scarcity in economics?

Scarcity in economics refers to the fundamental problem that arises because resources are limited while human wants and needs are virtually limitless. It is the imbalance between the finite availability of resources—such as time, money, labor, and raw materials—and the infinite desires for goods and services that individuals and society seek to satisfy. This leads to the necessity of making choices and trade-offs regarding how to allocate resources effectively.

Option B accurately captures this concept by highlighting the mismatch between resources and wants. In practical terms, scarcity forces individuals, businesses, and governments to prioritize how they use their limited resources to meet various needs and desires. It is a driving force behind economic decision-making, influencing behaviors in both microeconomic and macroeconomic contexts.

The other options do not align with the core definition of scarcity. For instance, the budget available for public services pertains to resource allocation rather than describing the nature of scarcity itself. The total quantity of goods produced in a nation reflects production output and economic activity but does not directly define scarcity. Lastly, the equal distribution of wealth speaks to a particular economic condition or policy but does not address the fundamental issue of limited resources in relation to unlimited wants.