alleryA resource gives rise to an economic problem only when it satisfies which pair of conditions?
AIt is unlimited and has alternative uses
BIt is unlimited and has a single use
CIt is limited and has a single use
DIt is limited and has alternative uses
Answer & Solution
Correct answer: D. It is limited and has alternative uses
1. If resources were unlimited, all wants could be met and no problem would arise.
2. If a resource had only one use, no choice between uses would be needed.
3. An economic problem appears only when a resource is both scarce and usable in more than one way.
4. The 'unlimited' choices fail because abundance removes the problem, and the 'limited with a single use' choice fails because one use leaves no choice.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit II "Basic Problems of an Economy and Role of Price Mechanism", p.0_
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