Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action. These concepts play a key role in management decisions because managers must decide how to allocate scarce resources in order to maximize their value and achieve their goals. By understanding the trade-offs involved in different decisions, managers can make more informed choices and avoid wasting resources.