Economics is the study of how scarce resources are allocated to satisfy seemingly unlimited needs and wants.
Do you have everything you want & need?

Although most of us meet our basic needs for food, clothing and shelter, we still have things we want. It may be a new car, a nice house, clothes or jewelry. No matter how much we have, it seems we always want more.

Why don't we have everything we want?

The things we want cost too much. Given our current income level, we do not have enough money to buy all the things we want. (If a mansion on the river cost only 5 cents, then everyone who wanted one would have one, wouldn't they?)

Why are mansions on the river so expensive?

The answer: SCARCITY.

We all need air to survive. Yet we pay nothing for it.

Nobody really needs a beautiful new sports car. Yet they cost $30,000 or more.

Air is tremendously abundant. So we do not pay for it.

Sports cars and riverfront mansions are relatively scarce. So they are expensive.



Our needs and wants are seemingly unlimited.

Yet, our resources are finite. We do not have enough "stuff" in the world to satisfy all of our needs and wants.



Thus,

economics is the study of how scarce resources are allocated to satisfy seemingly unlimited needs and wants.


So what are these scarce resources?


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