Scarcity occurs when the prices of goods are set too low.
Every economy must ration goods in some way because of overpopulation. When deciding whether to buy a second car, the economic way of thinking indicates that the purchaser should compare the benefits expected from two cars with the cost of both. People buy less beef in response to a rise in the price of beef. A voter supports a politician who favors raising taxes to build a dam the voter opposes. Farmers produce more bushels of wheat in response to an increase in the price of wheat.