Scarcity and opportunity cost in economics are best summarized by which statement?

• A. Scarcity occurs when resources are limited relative to wants, and opportunity cost is the value of the next-best alternative forgone.
• B. Scarcity means there is abundance of resources.
• C. Opportunity cost is only about money.
• D. Markets fix all scarcity.

Answer: (A)

Scarcity is about having limited resources compared with unlimited wants, so choices are unavoidable. When you make a choice, you sacrifice other options, and the value of the next-best alternative foregone is the opportunity cost. This statement fits both ideas directly: it shows why scarcity exists and how opportunity cost measures the cost of choosing one option over the next best alternative.

Scarcity isn’t abundance, so the second option isn’t correct. Opportunity cost isn’t only about money—it's about any forgone benefit, time, or alternative use, so the third option isn’t correct. Markets don’t magically solve scarcity—they help allocate resources more efficiently, but they don’t eliminate the fundamental problem, so the fourth option isn’t correct either.