Scarcity means that choices have to be made about how scarce resources are allocated between different uses
Resources are limited, so every individual, firm, and government must choose how to use them. Deciding to use a resource one way means it cannot be used another way at the same time.
Real World
When the UK government allocated £37 billion to the NHS Test and Trace programme during COVID-19, those same resources could not simultaneously fund schools, infrastructure, or social care — every pound spent was a direct allocation choice.
Exam Focus
For 'explain' questions, state the allocation decision first, then explain why scarcity forces that choice — examiners reward the causal chain.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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