ABSTRACT
Economists study the allocation of scarce resources among competing alternatives. One of the basic assumptions of economic theory is that individuals have limitless desires but limited budgets and therefore must make choices among the different alternatives, or goods, they desire. Markets facilitate these choices by determining the monetary price associated with each choice. Given these prices, individuals determine the best way to spend their limited budgets and still satisfy their most important desires. Economists refer to this process as constrained utility maximization and rational choice.
