Scarcity is the inability to satisfy all wants of humans due to a lack in resources or supply. Where human wants exceeds output, this can lead to something becoming scarce. Resources are means which make products, these can be natural resources such as land and raw materials, human resource or manufactured resources such as oil or a particular human resource involved are rare or in short supply, this will add to the value of the product.
One of the main reasons of something becoming scarce is that humans have wants and needs that exceeds in reality to what can be obtained. It is human nature to wants more. Scarcity, to a large extent can also be seen as a condition where no society has enough resources to produce all the goods and services necessary to satisfy all human wants. Humanity, in search of solution to this problem of scarcity, started practicing what is economics.
’Economics is the study of how scarce resources are allocated to satisfy competing ends. Economics is also simply the study of how society resolves the of scarcity” (source: Business Economics handout by EF Obeng-Abayie) The problem of scarcity faces human with the option of making choices since his resources cannot match his wants. In making these choices, individuals, societies, governments or nations have had to prioritize their wants to be able to minimize the problems scarcity poses to them.
Scarcity permeates all economic systems of nations, whether they practice the socialist, capitalist or mixed economic systems. In making choices as a way of finding some solution to the problem of scarcity, have to let go something else. This brings the issue of opportunity cost. Opportunity cost is the next best ranked alternative forgone because of choosing the given action. In conclusion, scarcity exists in all human societies. Human’s efforts to solve the problem posed by scarcity gave birth to economics.