scarcity theories

Scarcity theories address the fundamental economic problem that arises because resources are limited while human wants are virtually unlimited. This imbalance forces individuals and societies to make choices about how to allocate resources efficiently. Scarcity leads to trade-offs, meaning that to obtain more of one thing, we must sacrifice another. These theories help explain the value of goods and services, the necessity for prioritization in consumption and production, and the dynamics of supply and demand in markets. Understanding scarcity helps us navigate decision-making in everyday life and comprehend broader economic issues.