Scarcity

Statement

Scarcity is the phenomenon of limited resources being unable to satisfy unlimited wants.

Notes

Scarcity is the central economic problem and the reason economics exists: because wants exceed the resources available to meet them, every economic agent must choose how to allocate what it has, and every choice carries an opportunity cost. Scarcity is permanent and universal — distinct from a mere shortage, which is a temporary gap between demand and supply at a given price. The mechanism by which unlimited wants outstrip limited resources is set out in the central economic problem.