Econ: Scarcity

The need to make choices arises because everything that exists is limited, although some items may appear to be in abundant supply. At any single moment, a fixed amount of resources is available. At the same time, people have competing uses for these resources. This situation results in scarcity, which is the basic problem of economics.

Scarcity means that people do not have and cannot have enough income, time, and other resources to satisfy their every want. What you buy as a consumer is limited by the amount of income you have. In this case, income is the scarce resource. Even if everyone in the world were rich, scarcity would exist with respect to time. Even the richest person does not have unlimited time.

It is important not to confuse scarcity with shortages. Scarcity always exists because of competing alternative uses for resources. Shortages are temporary. Shortages often occur, for example, after natural disasters like hurricanes, tornadoes, earthquakes, or floods destroy goods and property.



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