Questions: Which of the following statements about the economic decisions consumers, firms, and the government have to make is false? (A) Governments face the problem of scarcity in making economic decisions. (B) Only individuals face scarcity; firms and the government do not. (C) Both firms and individuals face scarcity. (D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

The answer is B: Only individuals face scarcity; firms and the government do not.

Explanation for each option:

(A) Governments face the problem of scarcity in making economic decisions.

• This statement is true. Governments, like individuals and firms, have limited resources and must make decisions on how to allocate these resources effectively.

(B) Only individuals face scarcity; firms and the government do not.

• This statement is false. Scarcity is a fundamental economic problem that affects individuals, firms, and governments alike. All economic agents must make decisions on how to allocate their limited resources.

(C) Both firms and individuals face scarcity.

• This statement is true. Both firms and individuals have limited resources and must make choices about how to use them.

(D) Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

• This statement is true. Scarcity forces all economic agents—individuals, firms, and governments—to make trade-offs because they cannot have everything they want. They must prioritize their needs and wants and make decisions accordingly.