Which of the following is central to the definition of Economics?

Step 1: Analyze the question The question asks which idea is central to the definition of Economics, meaning the core concept the whole subject is built on.

Step 2: Explain the concept A common definition of Economics is: "the study of how individuals, firms and society choose to allocate scarce resources among competing wants and unlimited needs."

This definition has several parts:

• Resources are the inputs we have (land, labour, capital, entrepreneurship).
• Wants are what people desire, and they are unlimited.
• Capital is just one factor of production.
• Scarcity is the problem that resources are limited while wants are unlimited.

Step 3: Work through the options

• A. Resources: These are important, but having resources alone creates no economic problem. If they were unlimited, there would be nothing to study.
• B. Wants: Wants are one side of the problem. Without limited resources, unlimited wants would not force anyone to make choices.
• C. Scarcity: This is the gap between limited resources and unlimited wants. It forces us to choose, which leads to opportunity cost and a scale of preference. This is the root of every economic problem.
• D. Capital: This is only one factor of production, so it is too narrow.

Step 4: Answer Scarcity is the central idea in the definition of Economics, so the correct option is C.

Tip: Remember the chain Scarcity → Choice → Scale of Preference → Opportunity Cost. If a question asks for the "basic" or "central" problem or concept of Economics, think scarcity.