Which of the following statements correctly describes the nature of economic resources in basic economics?

Introduction / Context:
A central idea in economics is the concept of scarcity. Economic resources such as land, labour, capital, and entrepreneurship are considered scarce relative to unlimited human wants. This scarcity forces individuals and societies to make choices about how to allocate resources in the most efficient way. This question asks which statement correctly reflects the basic nature of economic resources.

Given Data / Assumptions:

• Economic resources include natural resources, human effort, machinery, and organisational ability, not just money.
• Scarcity is a foundational assumption in economic theory.
• The options present different claims about whether resources are limited, who controls them, and what they consist of.
• The correct statement should match textbook definitions of economic resources and scarcity.

Concept / Approach:
Economic resources are defined as inputs used to produce goods and services and are limited in quantity. Because resources are finite and human wants are unlimited, societies must choose how to allocate them, leading to the study of opportunity cost and efficiency. It is not correct to say that economic resources are always controlled by government, that they include only money, or that they exist only at the individual level. Nor is it accurate to claim that resources can never be exhausted, since overuse and mismanagement can deplete them. Therefore, the correct statement is that economic resources are limited.

Step-by-Step Solution:
Step 1: Recall that scarcity means limited availability of resources relative to wants, which is the starting point of economic analysis.Step 2: Apply this concept to economic resources, which include land, labour, capital equipment, and entrepreneurship.Step 3: Evaluate the statements given. The idea that economic resources are limited directly reflects the principle of scarcity.Step 4: Recognise that government does not always control resources; many resources are privately owned or managed by communities.Step 5: Understand that money is only a medium of exchange and a store of value; resources also include physical and human inputs, not just financial assets.Step 6: Reject claims that resources exist only at the individual level or that they can never be exhausted, both of which contradict basic environmental and economic facts.

Verification / Alternative check:
Introductory economics texts define economic resources as scarce means of production. They explicitly state that scarcity arises because resources are limited in supply while human wants are unlimited. Examples include limited land for agriculture, limited hours of labour, and limited capital stock. These texts do not restrict resources to money or to government ownership and warn that overuse can deplete natural resources. This framework confirms that the only universally correct statement among the options is that economic resources are limited.

Why Other Options Are Wrong:
Economic resources are not always controlled by government; in market economies most resources are owned by private individuals or firms. Saying that resources include only money is incorrect because productive resources also include physical and human inputs. The claim that resources exist only at the individual level ignores common property and public resources managed collectively. The statement that resources can never be exhausted is clearly false, as environmental degradation and depletion of minerals and forests illustrate.

Common Pitfalls:
Some learners equate economic resources with money alone, because financial constraints are very visible in daily life. Others may think of government budgets and assume that all important resources are centrally controlled. To avoid these errors, it is important to remember that economics studies how society allocates scarce resources of all types and that scarcity means those resources are limited in quantity relative to wants.

Final Answer:
The correct statement is that economic resources are limited.