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Scarcity, Opportunity Cost and Shortage
Scarcity is essentially the economic contradiction of our desire as humans to want to posses
everything and the limited resources available to everyone. This economic problem forces people to
have to make decisions as to how to best distribute resources so that people’s needs are met, and some
wants can be fulfilled. This is where opportunity cost comes in—nothing in this world is free.
Opportunity cost is when a choice is made there is a loss of a potential gain. If you choose one thing
over another you are sacrificing your ability to obtain or do one thing in pursuit of another – like the
choices people make in obtaining or creating a good, service or resource.
So, scarcity dictates that there are limited resources available to us and opportunity cost is how
we choose to spend our resources to obtain or produce a good service or resource. Due to scarcity we
must have opportunity costs. A shortage, on the other hand is when there is not enough of a particular
