The study of Economics becomes necessary because of the______________

1. Analyze the question The question asks why Economics, as a field of study, is needed. It is about the root problem that Economics exists to address.

2. Explain the concept Economics is the study of how people allocate scarce resources to satisfy unlimited wants. The basic economic problem is scarcity: resources such as land, labour, capital and entrepreneurship are limited, while human wants are unlimited.

Because of scarcity, we must:

• Choose what to produce
• Decide how to produce it
• Decide for whom to produce it

If resources were unlimited, there would be no need to choose, and Economics would not be necessary.

3. Evaluate each option

• A. Large population size of the world: Population affects demand and resource use, but it is not the root cause. Even a small population faces scarcity.
• B. Scarcity of resources: This is the fundamental reason Economics exists. Scarcity forces choice, and choice is what Economics studies.
• C. Opportunity cost of goods and services: Opportunity cost is a consequence of scarcity. We give up alternatives only because resources are limited.
• D. Need to satisfy every desire of man: Unlimited wants are one half of the problem, but they only cause difficulty because resources are scarce. Also, it is not possible to satisfy every desire.

4. Answer The correct answer is B. Scarcity of resources.

5. Exam tip Remember the chain: Unlimited wants + Limited resources → Scarcity → Choice → Opportunity cost. When a question asks why Economics is necessary or what the basic economic problem is, the answer is almost always scarcity. Opportunity cost is the result of making choices, not the cause.