Economic interactions involve scarcity and choice. Time and income are limited, and people choose among alternatives every day. In this chapter, we study the choices people make when faced with a scarcity of resources and the economic interactions among people when they make their choices. We begin by looking at scarcity, choice, and interaction for individuals. We study consumer and producer decisions, learn about the gains from trade, and see how the same principles that guide interactions between individuals can be used to study interactions between countries. We then look at scarcity and choice for the economy as a whole, and introduce the production possibilities curve. We conclude by studying two alternative economic systems, the market economy and the command economy, and by focusing on the role of prices.