Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which term is defined as the science of allocating scarce resources among competing choices?

1. Supply

2. Demand

3. Economics

4. Hedging

The correct answer is: Economics

The term that is defined as the science of allocating scarce resources among competing choices is economics. This field studies how individuals, businesses, and societies manage their limited resources to fulfill their needs and desires. Economics examines the decision-making processes involved in the allocation of resources, the trade-offs that arise from making choices, and how these decisions affect the production, distribution, and consumption of goods and services. In the context of scarce resources, economics provides the framework for understanding concepts like opportunity cost, supply and demand, and market equilibrium, which are essential to making informed choices in a variety of scenarios. It encompasses various areas, from microeconomics, which focuses on individual and business decision-making, to macroeconomics, which looks at the economy as a whole. Other choices represent different concepts related to economics but do not encompass the broader definition provided in the question. Supply pertains to the quantity of a good that producers are willing and able to sell at different prices, while demand focuses on consumers' willingness to buy goods and services. Hedging is a financial strategy used to reduce the risk of adverse price movements in an asset, and while it intersects with economic principles, it does not capture the broader concept of resource allocation as described in the question.