A community faces a severe water shortage but has various options for resource allocation. Which decision reflects the principle of economic scarcity most effectively?

Economic scarcity means that there are limited resources available to meet unlimited wants and needs. In a community facing a severe water shortage, the best decision would be to allocate water to the most essential uses first, like drinking, cooking, and sanitation, rather than for less critical purposes such as watering lawns or filling swimming pools. This reflects economic scarcity because it prioritizes the most pressing needs in a situation where there is not enough water for everyone to have all they want. For example, if the community has only enough water for each person to drink a certain amount daily, they must decide how to distribute that water fairly and wisely, ensuring that everyone stays healthy. By making these tough choices, the community acknowledges that while water is limited, it must be used in the best way possible.