Scarcity

Economic analysis is fundamentally about the maximization of something subject to constraints. These constraints - or scarcity - inevitably define a trade-off. For example, one can have more money by working harder, but less time . One can have more radishes only at the expense of, for example, fewer carrots .All economies in the world face scarcity.Scarcity is defined as: when the price is zero, the quantity demanded exceeds the quantity supplied.

Price is a measure of relative scarcity. If all other market variables are held constant; When the price is rising, this indicates the commodity is becoming relatively more scarce. When the price is falling, this indicates the commodity is becoming relatively less scarce.Adam Smith considered, for example, the trade-off between time, or convenience, and money. He discussed how a person could live near town, and pay more for rent of his home, or live farther away and pay less, "paying the difference out of his convenience".

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