Scarcity and choice
Definition
Scarcity is the fundamental economic problem that human wants are unlimited while resources are limited. Because of scarcity, individuals, businesses, and governments must make choices about how to allocate resources, which always involves trade-offs and opportunity costs.
Examples
- A student choosing between studying for a test or working a part-time shift faces a time scarcity trade-off
- A government deciding to spend more on defense has less to spend on education or healthcare
- A farmer with limited land must choose between growing corn or soybeans
Key Fact
Opportunity cost is the value of the next best alternative you give up when making a choice.
Study This Concept
Practice scarcity and choice with free review games in these units: