The basic reason why choices matter is that

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The prompt asks us to evaluate why choices matter in the context of economics, focusing on scarcity and decision making.
Option 1: 'resources to satisfy the wants of all individuals are limited' This statement highlights the fundamental economic problem: scarcity. Because resources (time, money, inputs) are finite, society cannot provide everyone with all the desired goods and services. This makes choices necessary and consequential, since selecting one option typically means forgoing another.
Option 2: 'an economy relies on a market to resolve problems of scarcity' While markets coordinate many allocations and help decide how resources are distributed, the existence of markets does not by itself justify why choices matter. Markets address allocation under scarcity but do not explain the necessity of making choices versus unlimited wants; they describe a mechanism rather than the core reason choices matter.
Option 3: 'choices result in scarcity' This is a misunderstanding. Scarcity is a condition that exists prior to choices because resources are limited; choices do not create scarcity. Rather, scarcity makes choices inevitable. Saying choices cause scarcity confuses cause and effect and reverses the fundamental relationship.
Option 4: 'the government has only a limited impact in a market economy' This statement discusses government influence, not the reason choices matter. The question asks for the basic reason choices matter, which is tied to limited resources and the need to allocate them efficiently. The level of government impact is about policy, not the rationale for why we must choose among alternatives.
Therefore, option 1 correctly identifies the foundational reason why choices matter in economics, while options 2, 3, and 4 misconstrue or misattribute the core issue related to scarcity and choice.

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The basic reason why choices matter is that

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