What economic condition describes a situation where unlimited wants exceed limited resources?

The situation where unlimited wants exceed limited resources is best described by the concept of scarcity. Scarcity refers to the fundamental economic problem that arises because resources (such as time, money, and materials) are limited while human desires for goods and services are virtually unlimited. This imbalance leads to the necessity of making choices about how to allocate resources effectively, as not all wants can be satisfied, resulting in prioritization and trade-offs.

Scarcity affects all levels of economic decision-making, from individual consumers deciding how to spend their income to governments determining how to allocate budgetary resources. It is a central tenet of economics, highlighting why we cannot have everything we desire and must consider the best use of limited resources.