The correct option is 2 and 3 only.
Explanation
Scarcity is the fundamental economic problem arising because human wants are unlimited while the resources (factors of production) required to satisfy them are limited. It dictates the behavior of all participants in an economy.
Statement-wise Analysis:
- Statement 1 is Incorrect: Scarcity is directly related to the problem of choice. Since resources are limited, individuals and societies cannot have everything they want; they must make choices about how to allocate resources efficiently. If there were no scarcity, there would be no problem of choice.
- Statement 2 is Correct: Scarcity applies to all economic agents, including consumers, producers, and the government. Even the government faces budgetary constraints and limited natural or physical resources, forcing it to prioritize certain expenditures over others (e.g., spending on defense vs. education).
- Statement 3 is Correct: Scarcity implies that resources are not only finite but also have competing or alternative usages. For example, a piece of land can be used for agriculture, industry, or housing, but not all simultaneously. This necessitates the allocation of resources to their most efficient use.
Key Takeaway:
Scarcity is the root cause of the central economic problems, forcing all economic agents to make choices regarding the allocation of limited resources that have alternative uses.