Scarcity
Plain definition
Scarcity is the condition in which people want more goods and services than available resources can produce. Because resources like time, land, labor, and raw materials are finite while human wants are effectively unlimited, every choice involves giving something up.
In economics
Scarcity is the starting point of all economics. It is why choices, trade-offs, and opportunity costs exist, and why markets, prices, and governments are needed to allocate limited resources. Scarcity does not mean poverty or a temporary shortage — it is permanent and universal, affecting rich and poor alike.
Example
A household with a fixed monthly income faces scarcity: spending 2,000 rupees more on dining out means 2,000 rupees less for savings or clothes. No matter how much income rises, new wants (a bigger car, foreign travel) appear, so scarcity never disappears.
A common mix-up is scarcity versus shortage. Scarcity is the permanent, economy-wide condition of limited resources relative to unlimited wants. A shortage is temporary and market-specific: quantity demanded exceeding quantity supplied at a particular price, usually caused by a price ceiling or a sudden supply shock.