Human wants are unlimited but resources are limited. So, today’s economist have to deal with a wide range of economic problem like poverty, unemployment, inflation, and shortage of high skilled labour, problems of global warming, and many other problems. This is the fact that we have scarce resources to satisfy our unlimited wants. As a result of this problem, the next problem scarcity creates is to make a choice for all. So, scarcity and choice are the basic problems in economics.
A situation in which wants are needs are in excess of the available resources is called scarcity. The conceptual meaning of scarcity, in economics, is that the commodity become scarce because it commands price or value. The term scarcity in economics means lack of enough resources to satisfy all desired wants of individuals , society and the nation as well. Economic resources are available in limited quantity and we can’t get all our needs and wants fulfilled. A commodity is scarce, in economic sense , not because it is rare or unavailable in market but because the means to purchase it are limited So , we need to make choice.
The act of fulfilling any wanior needs by economic agent out of many is called choice. All economic agents face the problem of choice due to unlimited wants and limited resources. Choice explain the concept that resources are scarce so choice have to be made by consumers, producers, firms and government. The optimization objective of economic factors needs making an appropriate choice in the use of available resources. Choice is involved in economic activities at both consumption and production levels. It is also related with individuals and the nation as well.