The Concept of Scarcity

Resources are the items needed to do something. For example, oil is a valuable
natural resource. Other resources can include workers, knowledge, or technology.

Scarcity is the idea that there are not enough resources to meet the wants of an
individual. If you wanted to buy a shirt, pair of pants and a pair of shoes, there is not
enough money to buy it all.
Many 1 year olds want or need a car. !he costs of owning and operating a car are
greater than the average 1 year old can afford. "et, sixteen year olds still want cars.
!his situation reflects the basic economic problem, scarcity.
Wants are items that make life more comfortable. For example, wants include luxuries
such as automatic dishwashers. #e could actually wash dishes by hand, but the
dishwasher makes the $ob easier and %uicker.
&overnments also face these kinds of decisions. &overnments also have limited resources, including
money.
For example, if a government chooses to spend a lot of money on military supplies, it may not be able to
supply as much food to needy people. 'ocal governments often decide between building more schools
and repairing roads. #hen making these decisions, governments and individuals must balance the
availability of resources with their wants.
#hen making a decision about how to spend the money, opportunity costs will occur.
Opportunity cost is defined as what you must give up when making an economic
decision. For example, if buy a shirt the opportunity cost is the $eans, shoes and
backpack that you could not purchase.