Economics is the study of scarcity?

In economics the limit on resources is called scarcity. Scarcity, defined in everyday language, means that there is not enough of everything to go around. Economists defined this term by comparing the particular demand for a certain resources with the availability of its supply. A scare resource is one for which the demand at a zero price would exceed the available supply. We have said that all resources are limited, but human desires for goods and services are almost limitless.

Therefore choices have to be made as to how to allocate our scare resources to maximize the satisfaction of our wants.

Scarcity means that people want more than is available. Scarcity limits us both as individuals and as a society. As individuals, limited income (and time and ability) keep us from doing and having all that we might like. As a society, limited resources (such as manpower, machinery, and natural resources) fix a maximum on the amount of goods and services that can be produced.

Scarcity requires choice. People must choose which of their desires they will satisfy and which they will leave unsatisfied. When we, either as individuals or as a society, choose more of something, scarcity forces us to take less of something else. Economics is sometimes called the study of scarcity because economic activity would not exist if scarcity did not force people to make choices.

When the choices are made, alternatives are given up. This fact is due to the scarcity of economic resources. We are living in a world where there’s nothing which is unlimited. Within our limited economic resources we have to sacrifice something for the sake of the other thing and we do it everyday

Scarcity occurs because our relatively unlimited wants cannot be completely met from the limited resources available. A good is scarce if people cannot freely get all they want, so that the good commands appositive price. Scarcity forces all levels of decision makers from individuals to society at large to resolve three basic economic questions:

a. What will be produced?

b. How will production occur?

c. Who will use the goods produced?