how does scarcity determine the economic value of an item? by the amount of goods that are produced by the capital required to build the factory by the unlimited wants of the consumers by the resources consumed in production

The correct choice is: by the unlimited wants of the consumers.

Why that’s the right answer

Scarcity in economics means resources are limited, but people’s wants are unlimited. Because there isn’t enough of everything for everyone, people must choose, and those choices – expressed as demand – help determine how much they are willing to pay.

When an item is scarce relative to how much people want it , its economic value (price) tends to rise because:

• Many consumers are competing for a limited supply.
• They are willing to pay more to get it.
• Sellers can charge higher prices due to that strong demand.

So scarcity determines value through the tension between limited resources and unlimited wants , not simply by:

• The amount of goods produced (that’s just supply, not value by itself).

• The capital required to build the factory (a cost factor, not a direct measure of value).

• The resources consumed in production (again, cost and input use, not the demand side).

A quick way to remember it:

If something is limited but nobody wants it, it has little value; if something is limited and many people want it, its value rises.

That “many people want it” part is exactly the unlimited wants of the consumers.