What is scarcity? The invisible hand that pushes prices up
Scarcity is the economic principle of limited resources against unlimited wants, forming the foundation of supply and demand. It forces individuals, businesses, and governments to make allocation choices, each involving an opportunity cost. Scarcity can be absolute (finite resources), relative (limited by distribution), or artificial (human-created). Unlike temporary shortages, scarcity denotes a fundamental limitation. This concept drives market prices, influences behavior through psychology like FOMO, and underpins critical decision-making across all levels of the economy.
