Final answer:
Scarcity is the economic problem of unlimited human wants in a world with limited resources, requiring the need to make decisions on allocation. The world has limited productive resources, leading to the necessity of choosing how best to use these scarce resources.
Step-by-step explanation:
Scarcity is a fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. The second assumption that reflects permanent universal conditions, alongside the understanding that more output will satisfy more wants, is b. the world has limited productive resources. Resources such as land, oil, and factories are limited, while our wants and desires for the goods and services these resources produce are essentially without end.
The issue of scarcity necessitates making decisions on how to optimally allocate these limited resources to meet our needs and wants. This is where the entire study of economics revolves and where concepts like opportunity cost come into play. Individuals, companies, and governments all face decisions that involve prioritising different objectives due to the constraints imposed by scarcity.