The correct option is B. Explanation of Why Option B is Incorrect The statement "Choice arises because of scarcity of resources" highlights a fundamental concept in economics: scarcity. Scarcity means that resources (like time, money, and materials) are limited, while human wants are virtually unlimited. This situation forces individuals, businesses, and governments to make choices about how to allocate their limited resources. Option B states: "Given numerous wants and limited resources, only individuals and business firms make choice." This statement is incorrect because it implies that only individuals and businesses are involved in the decision-making process regarding resource allocation. In reality, choices are made by various entities, including governments and organizations, which also play a crucial role in managing resources and addressing societal needs. Therefore, this option does not accurately reflect the broader context of decision-making in economics. Detailed Explanation of the Other Options Option A: "Human wants are numerous but the resources needed to satisfy them are limited." - This statement is correct. It encapsulates the essence of scarcity in economics. Human desires for goods and services are virtually infinite, but the resources (land, labor, capital) available to satisfy these wants are finite. This mismatch leads to the necessity of making choices. Option C: "The process of making a choice involves opportunity cost." - This statement is also correct. Opportunity cost is a key concept in economics that refers to the value of the next best alternative that is forgone when a choice is made. When resources are scarce, choosing one option means giving up another, and understanding this trade-off is essential for effective decision-making. Option D: "An economist is not interested in the morality or otherwise of any choice so made." - This statement is correct as well. Economists typically focus on the efficiency and outcomes of choices rather than the moral implications. Their analysis is often based on how resources are allocated and the resulting economic impacts, rather than the ethical considerations behind those choices. Summary of Key Concepts

1. Scarcity: Resources are limited while human wants are unlimited, necessitating choices.
2. Opportunity Cost: Every choice has an associated opportunity cost, representing the value of the next best alternative.
3. Decision-Making Entities: Choices are made by individuals, businesses, and governments, not just individuals and firms.
4. Economic Analysis: Economists focus on the efficiency and outcomes of choices rather than their moral implications.

Common Pitfalls to Avoid

• Overlooking the Role of Governments: Remember that choices are not limited to individuals and businesses; governments also make significant decisions regarding resource allocation.
• Misunderstanding Opportunity Cost: Always consider what you are giving up when making a choice, as this is crucial for effective decision-making.
• Confusing Economic Analysis with Morality: Recognize that economists analyze choices based on outcomes, not moral judgments.

By understanding these concepts, you will have a clearer grasp of the fundamental principles of economics related to scarcity and choice.