Scarcity refers to constraints limited resources impose on people, businesses, and governments to achieve an economic objective.
The most fundamental economic challenge is allocating scarce resources to achieve an economic objective. With our desires being boundless but our resources limited, choices become imperative. At the heart of economic theory is the process of identifying within the constraints of scarcity. For instance, a student may have to choose between studying or watching television because time is scarce. Similarly, limited capital may force a business to choose between advertising or purchasing new equipment. Scarcity, however, should not be mistaken for poverty. Even the most affluent individuals and companies contend with limits imposed by scarce resources.
Here is a short video further explaining the concept of scarcity.
Economics – Managing Our Scarce Resources
Opportunity Cost – The Cost of Every Decision
Production Possibilities Frontier
Circular Flow Model – We Depend On Each Other
