The key economics concept that serves as the basic for the study of economy is scarcity. Scarcity refers to the fundamental economic problem of limited resources and unlimited wants and needs. This concept drives the study of economics as it forces individuals and societies to make choices about how to allocate their limited resources in order to fulfill their unlimited wants and needs. Understanding scarcity and how individuals, businesses, and governments make decisions in the face of scarcity is essential to the study of economics.
