The fundamental economic problem being faced is one of

The correct answer is C. multiplicity of wants and scarcity of resources.

The fundamental economic problem is that people have unlimited wants, but resources are limited. This means that people have to make choices about how to use their resources to satisfy their wants.

Option A is incorrect because it is not a fundamental economic problem. The difference in the living standard of the people is a result of the choices that people make about how to use their resources.

Option B is incorrect because it is not a fundamental economic problem. Decision-making by the government is a way of dealing with the fundamental economic problem.

Option D is incorrect because it is not a fundamental economic problem. Shortage of labor is a result of the choices that people make about how to use their resources.

In conclusion, the fundamental economic problem is that people have unlimited wants, but resources are limited. This means that people have to make choices about how to use their resources to satisfy their wants.