Scarcity can be caused by a rise in demand, a fall in supply, or their combination. Free markets respond to the problem of scarcity through an increase in the price of product. Governments can overcome scarcity through the use of technological innovation and effective economic policies for better allocation of scarce resources.

Societies face limitations when trying to increase supply. Production capacity, land available for use, time, and labor are all considerations. Another way to deal with scarcity is by reducing demand through quotas, rationing, or price caps. Scarcity forces consumers to make choices that come with associated opportunity costs.