Scarcity is the excess of human wants and needs over
and above the resources available to satisfy them.
Needs are finite, whereas wants are infinite.
The issue of scarcity raises three questions:
What should we produce? How should we produce it? Who
should we produce it for?
The answers are provided by economic incentives, as
these influence choices, and as economists we assume economic agents make
rational decisions.
The environment is an example of a scarce resource, which is
affected by economic decisions.
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