Society has insufficient productive resources to fulfill all human wants and needs. A common misconception on scarcity is that an item has to be important for it to be scarce, or vice versa. This is not true, for something to be scarce; something must be given up, or traded off, in order to obtain it. Simply put, the price of a good signals the relative scarcity of the good.
The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice--giving something up, or making a trade off—in order to obtain more of the scarce resource that is wanted.
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what." The price system, or market prices, is one way to allocate scarce resources. In other words, if a society coordinates economic plans on the basis of willingness to pay money, members of that society will strive to compete to make money.
The notion of scarcity is that there is never enough to satisfy all conceivable human wants, even at advanced states of human technology. Scarcity involves making a sacrifice--giving something up, or making a trade off—in order to obtain more of the scarce resource that is wanted.
The condition of scarcity in the real world necessitates competition for scarce resources, and competition occurs "when people strive to meet the criteria that are being used to determine who gets what." The price system, or market prices, is one way to allocate scarce resources. In other words, if a society coordinates economic plans on the basis of willingness to pay money, members of that society will strive to compete to make money.