Final answer:
Scarcity occurs when there are unlimited wants and needs with limited resources. People have to make choices because they cannot have everything they want.
Step-by-step explanation:
Scarcity occurs when there are unlimited wants and needs with limited resources. It means that there is not enough to satisfy all the wants and needs of individuals or a society. In other words, when there is scarcity, people have to make choices because they cannot have everything they want.