Scarcity is a concept which is at the very heart of economics as a subject and why we study it. It refers to the idea that resources in the world are finite… they are not unlimited!
Without having access to infinite resources, we must make decisions about how we use the resources we have to maximise our satisfaction.
Some resources are certainly more ‘scarce’ than others, and this makes the decision on how to use them even more difficult. On the other hand, if there is a lot of a resource, we can say it is abundant.
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Key terms:
Economics – the study of the allocation of resources in order to satisfy as many wants and needs as possible.
Basic Economic Problem – the problem associated with having finite resources but infinite wants.
Resource – something which can be used to produce something else.