An agricultural drought causing a decline in crop production leads to which economic condition?

• A. Surplus
• B. Scarcity
• C. Inflation
• D. Unemployment

Answer: (B)

A drought that lowers crop production reduces the supply of agricultural goods. When supply drops while demand stays roughly the same, the good becomes scarce—the quantity available isn’t enough to meet people’s wants. That scarcity is the immediate economic condition described. Surplus would require more supply than demand, which isn’t happening here. Inflation is a general rise in price levels across many goods, and while drought can push food prices up, the specific situation is best described as scarcity. Unemployment could rise if production cuts persist, but the question focuses on the shortage of the product itself, which points to scarcity.