2

HILO

Which situation best represents a local government dealing with a problem of

scarcity?

O

A. A city lowers corporate taxes to encourage businesses to stay

there.

B. A city borrows a large amount of money from a bank to build a

new hospital.

C. A city helps poor citizens pay for their housing and medical bills.

D. A city can afford to make repairs on only one of its schools.

D. A city can afford to make repairs on only one of its schools

Explanation:

In option A, the city can afford to function with reduced taxes just to encourage business which means it has enough resources to buttress that.

In option B, the city can afford to borrow a large sum of money which it is sure it will be able to pay off. There is no scarcity in building the banks.

Option C shows that the city has enough reserved resource with which to assist its citizens.

D is the only option that shows actual scarcity or limited resources in the city.

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