A common economic situation where an economy's resources are insufficient to meet the existing wants is referred to as ______.

The situation described in the question is indicative of "scarcity," which refers to the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. Scarcity occurs when the demand for resources exceeds their availability, necessitating choices about how resources are allocated.

In economics, scarcity is the driving force behind the need for trade-offs, leading individuals and societies to prioritize certain goods and services over others. This concept is foundational in understanding why resources—such as time, money, labor, and materials—cannot satisfy every desire or demand. As a result, society must make decisions about what gets produced and consumed.

The other choices presented do not accurately encapsulate this fundamental concept. Distribution refers to how goods and services are shared among the population, wealth describes the abundance of resources or assets a person or group possesses, and income inequality denotes the unequal distribution of income across different segments of society. While these topics are related to economic conditions and may stem from or contribute to scarcity, they do not directly define the situation where resources fall short of wants.