Simply put, scarcity means that resources are limited. Scarcity refers to the essential fact that people’s wants or desires are always going to be greater than the resources available to fulfill those wants. Resources are all of the ingredients needed for production, including physical materials (such as land, coal, or timber), labor (workers), technology (not just computers but, in a broader sense, all the technical ability and knowledge that is necessary to produce a given commodity), and capital (the machinery and tools of production). The possibilities are endless.Īlthough every society answers the three basic economic questions differently, in doing so, each confronts the same fundamental problems: resource allocation and scarcity. Once they are made, the goods might be given out for free to the poor or sold at high prices that only the rich can afford. The goods might be produced by unskilled workers in privately owned factories or by technical experts in government-funded laboratories. In order to meet the needs of its people, every society must answer three basic economic questions:Ī society (or country) might decide to produce candy or cars, computers or combat boots.

Three Economic Questions: What, How, For Whom? What It Means

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