Goods and services are scarce because of the limited availability of resources (the factors of production) along with the limits on our technology and skillful people relative to the total amount desired. If somehow people desired nothing, there would be no scarcity. If resources were great enough to produce more than anyone desired, there would also be no scarcity. Scarce resources determine the location of society's production possibilities frontier or curve (PPF). Inefficiencies in the use of resources (less than full employment or inappropriate employment of inputs like land and capital) may limit the amount produced so that the economy operates below its PPF. It is difficult to abolish all inefficiencies, and some characterize institutional inefficiency as artificial scarcity.
Goods (including services) that are scarce are called economic goods (or simply 'goods' if their scarcity is presumed). Other goods are called free goods if they are desired but in such abundance that they are not scarce, such as air and seawater. Too much of something freely available can informally be referred to as a 'bad', but then its absence can classified as a good, thus, a mown lawn, clean air, etc.
Where goods are scarce it is necessary for society to make choices as to how they are allocated and used. Economists study (among other things) how societies perform the optimal allocation of these resources — along with how societies often fail to attain this optimality and are instead inefficient.
For example, some fruits, such as strawberries, are scarce in markets on occasion because they grow only at certain times of the year. When the supply of strawberries is lower, they become scarce, or not always available. This scarcity may have an effect on the demand for strawberries. If enough people want strawberries when none are available, then the demand increases. And this demand is high not because the price is low but because the supply is low.
Another example is gold jewellery. Because the amount of gold available is limited, it is necessary to make choices as to how it is allocated. In a market economy, this is achieved by trade. Other ways to make this decision involve tradition, community democracy and centralized command. In the market, individuals and organizations, such as corporations, trade resources amongst themselves, reallocating resources to where they are most wanted by those with purchasing power. In a smoothly operating market system, the rate of exchange between different resources, or price will adjust so that demand is equal to supply. One of the roles of the economist is to discover the relationship between demand and supply and to develop mechanisms (such as pricing, incentives, or penalties) to achieve an optimal outcome (in terms of consumer welfare).
Certain goods are likely to remain inherently scarce by definition or by design; examples include land and positional goods such as awards generated by honor systems, fame, and membership of elites. These things are said to derive all or most of their value from their scarcity. Even in a theoretical post scarcity society, certain goods, such as desirable land and original art pieces, would most likely remain scarce. But these may be seen as examples of artificial scarcity, reflecting societal institutions. That is, the resource cost of giving someone the title of "knight of the realm" is much less than the value that individuals attach to that title.
On the other hand, the ease with which some goods can be obtained or replicated (for instance intellectual property) led to the introduction of artificial scarcity in the form of legal or physical restrictions which limit the availability of such goods.
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