By definition, “Economics is a social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to meet their unlimited wants." Everyone has unlimited wants. It means that people are never satisfied with what they have as there is always something else that they would like to acquire. However, those wants can hardly be all achieved since our resources are scarce. In economics, resources can be identified as land (any natural resource), labor (any human physical or intellectual service), capital (machinery and equipment) and entrepreneurial ability (an ability to launch a profitable business by sourcing and organizing the resources needed). Scarcity exists when there is insufficient of something to supply to those who want it or need it, even when for free. This results in the decision that there should be price tags on goods and services. People are charged money to receive what they want in return. Therefore, it is necessary for individuals and businesses to utilize their available resources wisely to meet their many wants. With such dilemma in which there are finite resources versus infinite wants, choices must be made. For example, parents want to pay for their son to study in a university and buy a bigger house. With current income, if parents invest all in their son’s higher education, it is unlikely that they can afford a new house and vice versa. However, it is possible if they both increase their working hours a day. Once a choice is made, all other choices will then have to be given up. The benefit lost from the next best alternative is called opportunity cost. Individuals and businesses make choices based on their rational behavior, decisions at the margin and response to incentives. Rational choices depend on the individual “economic agents” decision-maker. They will decide to choose which alternatives that will benefit them most. On the other hand, marginal decision making will weigh the extra benefits received against the increase in cost from adding an additional unit of goods or services. Incentives can also affect people and firms when making a decision as well.