In economics, scarcity refers to the fundamental problem that resources are limited while human wants are unlimited. Because we cannot have everything we want, choices must be made about how to allocate land, labor, capital, and entrepreneurship. This gives rise to opportunity cost—the value of the next best alternative given up when making a decision. Scarcity forces individuals, firms, and governments to prioritize, deciding what to produce, how to produce, and for whom to produce. In short, scarcity is the reason economics exists: it drives decision-making and trade-offs at every level of society.