In addition to limited availability of resources, what is the other reason which compels every economy to decide on how to use its resources?

Resources do have competing usages

The correct answer is option (2) : Resources do have competing usages

This reflects the reality that resources are scarce relative to unlimited wants, and they can be used in different ways to produce different goods and services. Therefore, economies must decide how to allocate these scarce resources among competing uses to maximize their efficiency and utility.

"Production, exchange and consumption of goods and services are among the basic economic activities of life. In the course of these basic economic activities, every society has to face scarcity of resources and it is the scarcity of resources that gives rise to the problem of choice. The scarce resources of an economy have competing usages. In other words, every society has to decide on how to use its scarce resources."