Scarcity is a situation whereby the limited resources (e.g. ang pao, paint, brushes, stapler and bulltes) are unable to satisfy the unlimited wants (to do both CNY Banner and CNY Lantern). Since resources are limited, the class has to make a choice to allocate resources to maximise output and efficiency. The resources are also not homogeneous in the production of both the banner and the lantern, therefore, the class has made the choice of making the banner. Therefore, making the lantern will incur opportunity cost.

Although the class wants to achieve point F (ref. to PPC above) where both the CNY banner and lantern are produced, it is unattainable due to limited resources. Since our resources are more suited for the production of the banner, we decided to specialise as we have greater comparative advantage. By gathering all our resources and concentrating them on producing one banner at point E, we are therefore able to produce a banner of high quality at the highest efficiency and lowest cost of production.