Scarcity

Scarcity is a concept basic to all of economics: Goods having alternative uses can be increased only by sacrificing other resources or goods. Put another way, scarcity arises when wants are greater than means. Here is a third way to describe the same concept: everything in limited supply that is useful has a price.

Scarcity occurs when there is not enough of an item or service for everyone to have as much as they want at no cost. Anything that costs money is a scarce good. Anything that is always free, such as air is not scarce.

The economic definition of scarcity differs from our everyday definition of the word because anything that costs money is scarce. Although we do not typically think of commons objects, such as pencils, as being scarce, economics does include them within the concept of scarcity.