In a small town facing a severe drought, the local government has to decide how to allocate its limited water resources among three essential areas: agriculture, residential use, and local businesses. Given the principle of scarcity, which approach would best demonstrate an understanding of resource prioritization in this scenario?

In a small town dealing with a serious drought, the government must make tough choices about how to share its limited water supply. The principle of scarcity means that there is not enough water for everyone to have as much as they want, so prioritizing becomes essential. Agriculture is vital because it provides food for the community, and if crops fail due to lack of water, everyone suffers. Residential use is also important since people need water for drinking, cooking, and hygiene, while local businesses rely on water for their operations. A balanced approach might prioritize agriculture first, to ensure food security, then allocate enough for residential needs, and lastly provide what’s left for businesses, ensuring that the most critical needs of the community are met first.