Final answer:
The headline 'Southwest cities battle over water usage rates on the Dogwood River' demonstrates a government facing scarcity, as it shows multiple jurisdictions contending for limited water resources.
Step-by-step explanation:
The headline that illustrates a government facing the problem of scarcity is "Southwest cities battle over water usage rates on the Dogwood River." This headline reflects the situation where there is a limited supply of water, which is a vital resource, and multiple cities are struggling to allocate this scarce resource effectively. Scarcity is a fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It means that there are not enough resources to fulfill all of our wants and needs. Governments, like individuals, must make decisions on how to allocate resources efficiently, and the conflict over the Dogwood River is a clear example of scarcity where water resource is insufficient to meet the demand of all cities involved.