Today, a brother asked me, what is the underlying logic of economics? (In-depth)
First of all, from the perspective of transactions, 'the essence of economics is to study human nature and design rules to improve efficiency'.

The first principle of economics arises from the eternal contradiction between 'human nature' (infinite desires and the intrinsic drive to seek benefits and avoid harm) and 'scarcity' (the external constraints of limited resources).

Simply put: resources are scarce, while human desires are infinite.
This is the starting point of all economic activities and the fundamental reason for the existence of economics. If resources were inexhaustible, or if humans were without desires, then concepts like choice, cost, efficiency, trade, and growth... all core concepts of economics would lose their meaning, and even the discipline itself would vanish.

'Scarcity' is not a complex theory, but a basic fact statement about our world of existence. Your time is scarce (24 hours a day), your energy is scarce, the oil on Earth, clean land, top doctors, and even your attention at this moment are all scarce.

At the same time, however, the list of human desires can be infinitely extended: we want healthier bodies, more pleasurable experiences, broader knowledge, deeper social connections...

This eternal contradiction between 'finite' and 'infinite' is the first principle of economics.

Once we lock in the cornerstone of 'scarcity', the entire edifice of economics can be logically deduced.

First, scarcity → inevitably leads to 'choice'. Because resources are limited, you cannot have everything you want at the same time. You must make choices. Individuals must choose between consumption and savings, businesses must choose between expanding production or investing in research and development, and nations must choose between prioritizing education or national defense. Behind every decision, scarcity is at play.

Then, choice → inevitably accompanies 'opportunity cost'. This is the core concept directly derived from 'choice', and it is the essence of economic thinking. The true cost of making a choice is not the money you spend for it, but the most valuable alternative option you give up as a result. The opportunity cost of spending 3 hours watching a movie might be the income and promotion opportunities you could have gained by working during those 3 hours. Understanding opportunity cost is the beginning of thinking in an economic way.

Finally, to make optimal choices → people will respond to 'incentives'. Since they must weigh different options, people will naturally tend to choose the option that brings them the greatest benefit or the least harm (i.e., the optimal incentive). Prices, profits, wages, taxes, fines, honors... these are all incentives. Economists believe that if you want to predict people's behavior, you must first understand the incentive structure they face.

This encompasses the vast majority of economic research.
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Now, I need to know: where is the supply and demand relationship?

The supply and demand relationship is at the top of this logical chain, emerging as a macro phenomenon and analytical model when countless individuals 'respond to incentives' and enter the market to make 'choices' and exchanges under the constraints of 'scarcity'.

Demand: Essentially, it is a series of choices made by consumers under the constraint of budget scarcity, facing incentives such as prices. The lower the price, the smaller the opportunity cost of purchasing this item, so they are willing to buy more.

Supply: Essentially, it is a series of production choices made by producers under the constraint of scarce production factors, in pursuit of the profit incentive. The higher the price, the greater the incentive, and they are willing to produce more.

I believe this is the first principle because, in the face of the modern economy, we can still analyze using the principles of scarcity and desire.

In the era of the internet, the replication cost of software, music, and e-books is nearly zero; they seem no longer 'scarce'. Does the supply and demand model fail here?
If we return to the first principle, we find that scarcity has simply shifted ground. The scarcity of the goods themselves has decreased, but users' time and attention have become the new, most core scarce resources.

Understanding this, you can instantly grasp why global tech giants are competing for your screen time, and why 'freemium', 'monetizing traffic', and 'platform ecosystems' have become mainstream business models. They are competing not for product prices, but for the most valuable scarce resource of this era.
We can also gain insight into the core of policy design.

Whether it's carbon taxes, environmental policies, or education reform, the essence of all public policies is to redefine and redistribute scarce resources and create new incentive mechanisms. For example, imposing a carbon tax is based on the belief that 'clean air' is scarce, creating a price incentive to guide businesses and individuals to make environmentally beneficial 'choices'.

The rise of behavioral economics in recent years has challenged the traditional economic assumption of 'rational individuals', pointing out that people's choices are often irrational. But this does not overturn the first principle. It merely reveals that when humans face 'scarcity' and 'incentives', their brain's 'choice processor' has various interesting 'bugs' and 'shortcuts'. We are still making choices, but the way we make choices is more complex than we imagine.

So, the first principle of economics is not 'supply and demand'.

A more appropriate metaphor is: 'scarcity' is the 'operating system' of this computer called economics — it is the foundation of all calculations, the underlying rules that allow all programs to run, including profit and BTC, I can understand it this way as well.