To understand why the correct answer is option 'D' - Economic goods, let's delve into the concept of scarcity and the different types of goods.


Scarcity refers to the limited availability of resources relative to the unlimited wants and needs of individuals and society. This fundamental economic problem arises due to the fact that resources are finite, while human wants are infinite.


In economics, goods are categorized into different types based on their characteristics and nature. The two main categories of goods are:

1. Free Goods:
- Free goods are those that are available in abundance and have no opportunity cost.
- They are not scarce and do not have a market value.
- Examples include air, sunlight, and water from natural sources.

2. Economic Goods:
- Economic goods are goods that are scarce and have an opportunity cost.
- They are limited in supply relative to the demand for them.
- Economic goods have a market value and are subject to exchange.
- Economic goods can further be classified into two subcategories: consumer goods and capital goods.


Economic goods can be further divided into two types:

1. Consumer Goods:
- Consumer goods are goods that are directly consumed by individuals to satisfy their wants and needs.
- They include items such as food, clothing, and electronics.
- Consumer goods are typically the end products that individuals purchase for personal use.

2. Capital Goods:
- Capital goods, also known as producer goods or investment goods, are goods that are used to produce other goods and services.
- They are not directly consumed but are used in the production process.
- Examples include machinery, equipment, and buildings.
- Capital goods are essential for increasing the productivity and efficiency of an economy.


Based on the given options, the correct answer is option 'D' - Economic goods. This is because economic goods are the goods that are scarce and limited in supply. They have a market value and are subject to exchange. Both luxury goods and expensive goods may fall under the category of economic goods, but they do not encompass all economic goods. Capital goods, on the other hand, are a specific type of economic goods that are used for production purposes. Therefore, the most appropriate and inclusive term for goods that are scarce and limited in supply is economic goods.