If society is faced with unlimited wants but limited resources, what underlying economic principle necessitates making choices about resource allocation?

In economics, the situation where society has unlimited wants but limited resources is called scarcity. This means that there are not enough resources, like money, time, or materials, to satisfy everyone's desires. Because of this scarcity, people and governments must make choices about how to use their resources effectively. For example, if a city has a limited budget, it must decide whether to spend money on building a new park or improving schools. This choice is necessary because choosing one option often means giving up the other, highlighting the importance of prioritizing needs and wants in a world with limited resources.