The Scarcity Problem

The fundamental problem (sometimes referred to as "the economic problem") that economists study is one of scarcity.

Scarcity itself can be defined in several different ways (limited resources, having to make a choice between alternatives, etc.), but its meaning is always the same:

That's it.  It's really no more or less than that.

Scarcity is also a concept that varies depending on the situation.
For example, in the desert, water is a scarce resource, because there isn't enough to go around.

But in, say, a swampy area, water is not a scarce resource.  In fact, something completely different, like dry ground, could be considered a scarce resource in a swampy environment.

Regardless of the specific resource, scarcity necessitates choice.  That is, because a resource is scarce, a decision maker must choose between two or more alternatives.  You can't have your cake and eat it too.

In a decision-making situation, sometimes there is more than one scarce resource.  For example, instead of buying several different kinds of deodorants at once, you might only be able to choose one type of deodorant.  This could be because your money is scarce, but it could also be because your space is scarce, too.  Perhaps your bathroom medicine cabinet only has room for one stick of deodorant, so you can only buy one stick at a time.  

For most of us, money is a scarce resource.  In fact, scarcity of money is the reason many people develop budgets, or consult financial planners.  These tools and services are used in order to figure out how to best allocate limited funds.  

It's interesting to take this (simplified) view of scarcity and apply it to everyday life.  You might be surprised at some of the crazy ways scarcity emerges, and how much it influences the decisions we all have to make on a daily basis.  Scarcity, essentially, is what economists study.  It's basically what you're studying in most economics classes, whether you like it or not.