The basic economic problem of having people with virtually unlimited wants in an environment of limited resources.
One of the best examples of scarcity is the gasoline shortage in the 1970's. Because of the oil crisis, many people decided to build up stocks of gasoline. As a result, demand increased significantly. However, due to the difficult situation at the time, supply could not be increased accordingly and gasoline became extremely scarce.
Scarcity is one of the most fundamental principles in economics. It is the reason why people face trade-offs and experience opportunity costs. In other words, it builds the foundation for pretty much all other economic principles.
Labels: Dictionary, Scarcity