Economics Fundamentals: Scarcity

Scarcity is a fundamental principle in economics that lies at the bedrock of the elegant social science. Scarcity in economics refers to the limitations inherent in our world and universe. We live in a scarce world. There are finite amounts of all of the resources humans find useful. There’s a finite amount of timber, coal, oil, land, cattle, chickens, iron ore, land, etc. Additionally, humans have a finite amount of time in the day, year, and life.

Because of scarcity, choices must always be made regarding what to produce, what to spend our time on, what to spend our energy on, and what to spend our money on. There are alternative uses to land, resources, capital, and time. All of the possible uses cannot come to fruition because there is not enough land, resources, capital, and time for them. It is the role of economics and economists to assist with finding the best uses for scarce resources; the best uses generally meaning those uses which create the most utility.