Scarcity and choice are important in economic theory as most resources are limited, forcing people to make tough decisions and impacting prices. Scarcity can change over time, affecting price fluctuation and distribution. Resources can be abstract, such as patience or willpower. Decision-making can involve complex factors.
Scarcity and choice are fundamentally related because they are the driving forces behind many economically oriented human behaviors. The fact that most resources are limited to some extent forces people to make tough decisions and also has a direct impact on the price of the things people want. For the purposes of this definition, resources could be anything from money, possessions, time, or even more abstract things like patience.
Most of the things people want are limited, which is why scarcity and choice are so important to economic theory. For example, it takes time, manpower, and a myriad of materials to build a television, and all of these things exist only in limited quantities. Manufacturers are usually forced to take these things into consideration when pricing items. Also, when people go out to buy a TV, they tend to have a limited amount of money to spend, so they have to decide if they want a TV bad enough to spend as much as the manufacturer is asking.
One of the most important variations in the problem of scarcity and choice is that scarcity can change quite a bit over time and there is often a lot of price fluctuation. For example, bad weather during the growing season can make some crops temporarily scarce, driving up prices. This forces people to make tougher choices about how they use their money to buy food. If the scarcity becomes too great and a severe shortage occurs, prices will generally rise such that only the people with the most money can afford an item, which is how decisions about distributing scarce items are made in many capitalist economies.
The resources involved in the issue of scarcity and choice need not be as simple as manpower, time, money or supplies. Sometimes, they can be very abstract ideas and feelings. For example, if a person has to wait a long time for something good to happen, or if getting something is very difficult, his patience or willpower may become a scarce resource. If he has to expend too much patience or willpower, he might just decide that the item isn’t really worth it. In many cases, problems related to scarcity and the equation of choice could also be very complex, involving a combination of both abstract and more substantive factors in the decision-making process.
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