Glossary · Economic ideas
Scarcity
Scarcity means there is not enough of something for everyone to have all they want, so people, firms and countries have to choose.
Also called: economic scarcity, limited resources, scarce resources
A cube about 22 meters (73 feet) on each side. Mines add about 3,300 tons a year.
$4,105 an ounce, Oct 2026.
In plain words
You have one Saturday, $50 and a list of ten things you would love to do. You can’t do them all. That everyday squeeze is scarcity: our wants have no end, but time, money, land, energy and people’s work do.
Scarce does not mean rare. Bread is not rare, but it is scarce in the economist’s sense: it takes flour, ovens and bakers’ hours to make, and those could have made something else. Only things that are free and unlimited for everyone, like the air on a mountain, are not scarce.
Because resources are scarce, every choice has a cost: what you give up, the opportunity cost. Economics is, at heart, the study of how people make those choices.
Example
How scarce is gold?
Gold is the classic scarce thing: it can’t be made, only dug up, and almost none of it is ever used up.
- The US Geological Survey estimated that 152,000 metric tons of gold had been mined by 2005. Adding each year’s mine output since, the total reaches about 211,000 tons by 2025.
- Gold is heavy: a cubic meter weighs about 19.3 tons. All of it would fit in a cube about 22 meters (73 feet) on each side.
- Mines add about 3,300 tons a year. At that pace it would take 64 years to dig up as much again.
- At $4,105 an ounce (Oct 2026), all of it would be worth about $27.8T.
Gold is valuable less for what it does than for how little of it there is.
One level deeper
Economists call a good scarce when, at a price of zero, people would want more of it than exists. Then something has to decide who gets it: prices, lines, rules, lotteries or force. Markets use prices: whoever will pay more gets the good, and the high price tells producers to make more.
Scarcity is not fixed. New technology can make things far less scarce: aluminum was a precious metal until a cheap way to refine it was found in 1886. New wants and new limits can make things scarce that were not, like fresh water in a long drought.
Scarcity is the reason prices exist, the reason every choice has an opportunity cost, and the root of most other ideas in this glossary, from incentives to the tragedy of the commons.
Why it matters
It is why everything has a price and every choice has a cost, for a family budget as much as for a country.
It explains what is valuable: diamonds cost more than water not because they are more useful, but because they are scarcer. Economists call it the diamond–water paradox, and marginal utility solves it.
It forces trade-offs in public life too: money spent on one road is not spent on a school.
A common mistake
Myth: Scarcity means poverty: rich people and rich countries don’t face it.
In fact: Scarcity is about choices, not about being poor. A billionaire still has 24 hours a day, and a rich country still can’t do everything at once. Wealth changes which choices you face, not whether you face them.
Questions people ask
What is scarcity in economics?
The basic fact that resources (time, money, land, raw materials, people’s work) are limited while wants are not. It means every choice involves giving something up.
What is the difference between scarcity and a shortage?
Scarcity is permanent and everywhere: there is never enough of everything for everyone. A shortage is temporary and specific: at the current price, buyers want more than sellers offer. A price that is free to rise usually ends a shortage; nothing ends scarcity.
Why is gold valuable?
Mostly because it is scarce and lasts almost forever. All the gold ever mined, about 211,000 metric tons, would fit in a cube 22 meters on each side, and mines add only about 3,300 tons a year.
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About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Gold: World Bank Commodity Price Data (The Pink Sheet), CMO-Historical-Data-Monthly.xlsx, sheet "Monthly Prices", column "Gold"; edition updated 2026-11-03; values through 2025-12 from the January 2026 edition (https://thedocs.worldbank.org/en/doc/18675f1d1639c7a34d463f59263ba0a2-0050012025/related/CMO-Historical-Data-Monthly.xlsx).
- World gold mine production (USGS): U.S. Geological Survey: Historical Statistics for Mineral and Material Commodities in the United States, Data Series 140, gold (world production); later years from Mineral Commodity Summaries, gold (MCS 2025, MCS 2026).
- All gold ever mined: the US Geological Survey’s estimate of 152,000 metric tons through 2005 (Mineral Commodity Summaries, January 2006), plus USGS world mine output for every year since; the latest year is an estimate. The total includes gold since lost, which USGS then put at about 15%. Cube size at gold’s density of 19.32 grams per cubic centimeter; value at the World Bank’s monthly average gold price.
- This page explains a term. It is not investment advice.