An individual consumer has to make an economic choice due to scarcity. For example, a consumer has unlimited wants (e.g., wanting a new phone, a holiday, and new clothes) but has a limited income (a finite resource). Because their income is not enough to satisfy all their wants, they must choose which goods or services to purchase and which to forgo, creating an opportunity cost.
The basic economic problem is scarcity, which arises because people have unlimited wants but resources are finite. For an individual consumer, the most common scarce resource is money or income. Since they cannot afford everything they desire, they are forced to make choices. Every choice involves an opportunity cost – the value of the next best alternative that is given up. For instance, choosing to buy a video game might mean giving up the opportunity to go to the cinema.
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