Question

“Scarcity and choice go together.” Comment.

Answer 1

We live in a world where resources are limited but human wants are unlimited. Everyone desires better food, clothing, housing, education, entertainment, and more, yet the available resources are insufficient to satisfy all these desires. Even the wealthiest countries, such as the U.S.A., cannot fulfill all the needs of their population. This universal scarcity of resources results in the necessity to make choices about how to best allocate the limited means to meet the varied wants. If resources were abundant, there would be no need for such decisions. Therefore, economics studies how to make optimal choices in the face of scarce resources.